L1 GROUP LIMITED — Annual Report 2016

Aug 24, 2016

Appendix 4E

Preliminary final report

Listing Rule 4.3A

Company	Platinum Asset Management Limited
ASX Code	PTM
Year Ended	30 June 2016
Previous corresponding period – Year Ended	30 June 2015
ABN	13 050 064 287

Results for Announcement to the Market

Announcement to the market for the Platinum Asset Management Limited Consolidated Group should be read in conjunction with the attached 30 June 2016 Annual Report:-

	% Mvt	\$A'000
Total revenue	-4.37%	344,658
Profit from ordinary activities after income tax	-6.38%	199,870
Net profit attributable to members	-5.91%	200,887
Basic and diluted EPS (cents per share)		34.24 cps

The decrease in revenue and profit was mainly due to foreign exchange gains on our US Dollar cash holdings being lower in FY 2016 relative to FY 2015. Average Funds Under Management ("FUM") which drives management fee revenue, only decreased by 1.2%.

Dividends

Dividend declared	16 cents per share fully-franked
Ex-dividend date	31 August 2016
Record date	1 September 2016
Payable date	22 September 2016

An ordinary dividend of 16 cents per share fully franked was paid on 22 March 2016.

Refer to the attached audited financial statements for financial data on the Consolidated Group.

Dividend Reinvestment Plan

Whilst the Company has a Dividend Reinvestment Plan in place, it is not activated.

Level 8, 7 Macquarie Place, Sydney NSW 2000, Australia | GPO Box 2724, Sydney NSW 2001

Telephone 61 2 9255 7500 | Investor Services 1300 726 700 | Facsimile 61 2 9254 5590 | Email invest@platinum.com.au | Website www.platinum.com.au

Other Information

Net tangible assets per share was \$0.62 at 30 June 2016 as compared to \$0.59 at 30 June 2015.

A Stannard Finance Director and Interim Company Secretary 25 August 2016

PTM Chairman's Report 2016

Extending and growing the "Platinum" brand

There were several positives in the current year associated with developing and growing the business. The Platinum Group successfully launched two products that will assist investors both in Australia and overseas to diversify their investment portfolio into global shares:

• the launch of our new Listed Investment Company (LIC), Platinum Asia Investments Limited (ASX code: PAI), which is a SMSF focussed product that raised approximately \$292.8 million and listed on the ASX on 21 September 2015; and
• the launch of our UCITS (Undertaking for Collective Investment in Transferable Securities) funds in the Republic of Ireland, which are designed to attract larger global institutional investors and extend the Platinum brand name into offshore markets.

In addition, Platinum had an extremely busy year implementing strategies to retain and attract new investors, particularly in these times of great market uncertainty. Examples of key initiatives that the business has undertaken include expansion of the team of investment specialists that has resulted in an increase in adviser visits and client presentations, increased number of adviser roadshows allowing advisers to gain valuable investment insights, development of our web-site to improve communication with investors and allow investors to gain access to a regular stream of interesting and relevant investment articles and new ways of marketing Platinum's products.

Operating Performance

The performance of the Company has been adversely impacted by increased volatility in global markets, together with a slowing in global growth.

In the current year, fee revenue declined by 0.9% to \$337.9 million (2015: \$340.9 million) on account of average Funds Under Management ("FUM") declining by 1.2% to \$25.8 billion (2015: \$26.1 billion).

Total revenue declined by 4.4% or \$15.7 million to \$344.7 million (2015: \$360.4 million), caused by lower non-fee income, including mark-to-market losses on our investment in Platinum Asia Investments Limited (PAI) (down \$1.5 million) and UCITS funds (down \$1.4 million), as well as last years windfall gains on our US Dollar cash holdings and investments not being repeated in 2016 (the AUD/USD exchange rate during 2015 fell from 94 cents down to 76 cents between 1 July 2014 and 30 June 2015).

Costs increased by 6.1% or \$3.6 million relative to the prior year, with increases in staff and business development costs partly offset by lower custody expenses.

Profit before income tax expense was \$282.2 million (2015: \$301.6 million) which represents a decrease of 6.4% on the previous year. The profit after tax for the year was \$199.9 million (2015: \$213.5 million) which also represents a decrease of 6.4%.

Funds under Management ("FUM")

The first few months of the year were positive from a FUM point of view. It is for this reason that average FUM for the year to 30 June 2016 decreased by only 1.2% or \$0.3 billion to \$25.8 billion, compared to an average FUM of \$26.1 billion for the previous year.

The 30 June 2016 closing FUM was \$22.7 billion, and this represents a decrease of \$4.2 billion or 15.5% from the 30 June 2015 closing FUM of \$26.9 billion. The decline in FUM over the course of the year was caused by market depreciation of \$1.8 billion, capital outflows of \$1.5 billion, and the 30 June 2016 net distribution from our funds of \$0.9 billion. Over \$1 billion of the net outflow related to one large US institution, who closed their account with us.

Remuneration Matters

Staff costs increased in the current year by \$2.5 million. This increase was mostly attributable to extra incentives being paid to a handful of staff who have made outstanding contributions to the firm over a number of years. Outside of this handful of staff, the incentive pool was relatively flat year on year, roughly in line with revenue growth.

For the investment team, bonuses paid are dependent on achieving strong relative returns or outperformance of benchmark returns over a one and three year period, and hence bonuses paid to the investment team were, for the most part, subdued in 2016. This underperformance against benchmark returns also meant that this was the second year in a row that there was no allocation to key members of the investment team under the profit share plan.

Given the decline in both absolute and relative performance across our Funds and mandates, falling average FUM and investment outflows, Platinum's Chief Investment Officer, Andrew Clifford did not receive a bonus in 2016.

Only two members of KMP received a bonus in 2016, being the Director of Investment Services and Communications, Elizabeth Norman and the Finance Director, Andrew Stannard.

A new "Deferred Bonus Plan" was approved by the Nomination and Remuneration Committee. The main objective of the Plan is to recognise the contributions made by senior employees and to retain their skills within the firm. Under this plan, select employees will defer a proportion of their bonus and instead receive deferred rights. These rights will then convert to Platinum Asset Management Limited (PTM) shares if these senior employees remain employed at Platinum for a period of four years from the grant date of 20 June 2016. In the current year, the total deferred bonus that was converted to deferred rights to PTM shares was \$3,650,000. The accounting impact of the award will be expensed through the profit and loss statement over the five year service period of the award, so the expense impact is smoothed. In order to hedge the Company's exposure to these rights, the Company acquired, via an Employee Share Trust, an equivalent amount of shares that was purchased onmarket. Therefore, this year's award did not dilute existing shareholders.

Dividends

The Directors have declared a fully-franked ordinary dividend of 16 cents per share and this will be paid on 22 September 2016.

A fully-franked ordinary dividend of 16 cents per share was paid on 22 March 2016.

The Directors are confident that future dividends will be fully-franked.

Whilst the Company has a Dividend Reinvestment Plan in place, it has not been activated and is unlikely to be activated in the near term.

The Board and its Associated Committees

During the year, the Company was delighted to announce that Mr Andrew Stannard joined the PTM Board as our Finance Director, bringing with him over 25 years of experience in the funds management sector.

Both the Nomination and Remuneration Committee and Audit, Risk and Compliance Committee had productive years. The Nomination and Remuneration Committee has had to oversee a new Deferred Bonus Plan and also changes to the composition of the Board.

The Audit, Risk and Compliance Committee have had to oversee many regulatory changes and the increased level of resources attributable to compliance is strongly linked to the growth of the business.

Director Renewal

The Company is fast approaching 10 years since it listed on the ASX in May 2007. As a consequence, the Board has spent a significant amount of time discussing the issue of succession planning and has implemented a plan for Director renewal.

As a result, I am delighted to announce that Ms Anne Loveridge will be appointed to the PTM Board during September 2016, and succeed Ms Margaret Towers who will then retire from the Board after over nine years of service. Anne is currently a Non-Executive Director for the National Australia Bank (NAB) Group and has over 30 years of experience as a former partner in the Financial Services Assurance practice at PricewaterhouseCoopers (PwC).

The Board of PTM would like to extend its thanks to Margaret for her invaluable contribution to the Board over the last nine years.

In accordance with good governance and the ASX Guidelines, we intend to continue with the plan of Director renewal and additional Board replacements, at a Non-Executive Director level, will likely be made in the future.

Commitment to Climate Action

The Company continues to monitor its carbon usage. Carbon credits have been purchased by the Manager to offset any material carbon emissions made by the Company, for electricity usage and travel for the purposes of stock research conducted by the investment analysts.

Conclusion

The Managing Director's Letter to Shareholders addresses the challenging global environment being faced by the business, key initiatives that have been undertaken and the investment outlook.

Michael Cole Chairman 25 August 2016

2016 Managing Director's Letter to Shareholders

Looking after people's money has been unusually difficult in an environment of Central Bank induced distortions. It is made all the more challenging when one attempts to protect the real value of an equity portfolio. With this in mind, it is perhaps worth recapping the zig zag nature of the interplay of Central Banks and the markets over the last eight years since the US sub-prime mortgage crises morphed into the Global Financial Crises (GFC).

Memories have perhaps faded as to the existential nature of that melt-down. The great fear felt as over eight million jobs were lost in the US and the pillars of the system crumbled into insolvency and nationalisation. The Fed moved quickly to drop short rates to zero by flooding the system with reserves, thereby allowing the banks to improve their profitability, but in addition, many were forced to raise fresh equity capital and 'encouraged' to merge. So severe was the shock that the Fed embarked on the experiment of quantitative easing (QE) which involved creating bank reserves in exchange for the purchase of bonds and mortgages to affect (and reduce) interest rates right across the yield curve. (In this first phase of the crises, Platinum's performance shone clearly having anticipated a bleak outcome from untrammelled credit creation).

It wasn't until the second half of 2009, well-after the banking system had been stabilised, that the economy began to show signs of life. Investors anticipated a traditional sharp recovery, fuelled by credit growth, consumer spending, inventory restocking and investment growth, and job creation. Cyclical stocks were bid up aggressively but it soon became evident that in an economy already overloaded with debt, credit creation, investment and job creation were not as responsive to low interest rates as they had been in the past. This led to PIMCO's Bill Gross coining the term 'new normal' to describe the paradigm of overindebtedness and slower growth. By late 2010, stock markets faltered and concern around the anaemic recovery saw the Federal Reserve initiate a second round of money printing. (This was the beginning of the search for certainty that we allude to in our Fund quarterly reports.)

The situation in Europe largely mirrored that of the US initially. The lending excesses had been less pronounced, and the economy and banking system wasn't as badly affected as it was in the US, with some notable exceptions. The policy response was also more restrained with the European Central Bank (ECB) at the time being concerned with overshooting its inflation target than a potential deflationary depression. With seemingly stillborn recoveries in the US and Europe, investors turned their attention to the vibrant emerging markets where debt levels were low and the characteristics of a traditional recovery were evident. This largely reflected events in China where policy makers were unnerved by the speed and ferocity with which the global shock had been transmitted to their newly-open economy. State-owned banks were whipped into a lending frenzy with the emphasis on investment in infrastructure which reignited the commodity boom that was otherwise doomed to end.

Investor confidence in emerging markets and caution around developed markets was reinforced when the tentative recovery in Europe was derailed by the evolving sovereign debt crisis from 2011-2013. This stemmed from earlier disparities within EU monetary zone where interest rates took the form of one-sizefits-all and had sparked housing manias on the periphery. From being soundly funded, several countries suddenly found themselves deficient as their Governments issued debt to staunch the bleeding in the private sector. Being part of a trading block with no flexibility to set their own interest rates and with agreed budget deficit limits, these countries were forced into structural reforms and significant unemployment. Investors wanted nothing to do with European equities during this episode and if they did, they stuck to only the most defensive names or those with significant exposure to much-loved emerging markets. By 2013 investor sentiment toward the US and Europe had bottomed. The ECB had cut interest rates to zero and had begun buying government bonds through repurchase agreements. This stabilised government bond markets and to an extent, the banking system.

In the US, the Federal Reserve had initiated a third round of QE by late 2013 in response to the political deadlock in Congress which had created a budget crisis that was beginning to impact consumer and business confidence. By 2014, the US and European economies had passed the worst and were back on a recovery path.

At this point, however, China began losing momentum and investors began to question the wisdom of the debt-fuelled investment binge. At the same time, President Xi assumed office and cracked-down on corruption, which crippled government activity, and introduced an economic reform agenda that prioritised services over debt-fuelled investment in heavy industry. China's economic growth began to slow with manufacturing particularly hard hit and this dragged commodity prices down. This triggered a slowdown in many emerging markets, like Brazil and South Africa, as they failed to reform and change policies that had relied on the commodity windfall continuing indefinitely.

The halo around emerging market stocks began to dissipate and investors fled to the safety of developed markets, which by now were showing renewed growth momentum and had experienced some deleveraging. Initially, they favoured US stocks where the domestic recovery appeared more entrenched but Europe returned to favour when the ECB introduced full-blown QE in early 2015 with many investors expecting that to boost domestic demand, while exporters benefitted from the associated weakness in the Euro. Japan also experienced a resurgence in investor sentiment when it introduced its own policy of QE in 2013. The Yen had been a particularly strong currency since the GFC with the effect that Japan absorbed some of the pain of adjustment from other economies like Korea and Europe. The Yen depreciated sharply during 2013-2014 and Japanese equities performed particularly well.

During 2014-2016 the US, Europe and Japan continue to experience slow, grinding, recoveries which are somewhat disappointing when seen in the context of the unprecedented scale of monetary stimulus being applied. By late 2015, US policymakers had actually adopted a tightening bias. Their counterparts in Japan and Europe went the other way, cutting interest rates below zero. Supposedly these decisions were driven by the fear of deflation becoming entrenched although a desire to see their currencies depreciate likely played a large role. The introduction of negative rates has pressured bank profitability and threatens their solvency by leaving them little margin to absorb shocks.

Now, with growing evidence that Central Banks have done all they can, the spotlight is shifting to government spending. Japan has initiated a large round of fiscal stimulus in recent weeks. In the US fiscal policy will require political cooperation between the increasingly polarised Republican and Democratic parties. While in Europe it will require the agreement of the fiscally conservative Germans and Dutch.

All this unprecedented economic experimentation has led to the most extraordinary bull market in bonds ever. Investors have scorned cyclicality, preferring 'certainty' in a yield challenged world and this has benefitted consumer staples, REITS and Utilities. This has been the one constant in this zig-zagging world which called for a constant change in asset allocation across countries but with the back stop of favouring certainty. As the US economy has been the most robust performer, this too has been a consideration for investors even though, many of the companies most loved are barely growing.

With our preference for seeking out the most attractively priced companies around the world, rather than being driven by benchmarks and shorter term technical factors, this has not been the best environment for a value sensitive stock picker like Platinum Asset Management.

With their currencies being actively debased, the question is when will this frenzy cease? Across economies, deflation seems the prospect yet the tightness of the US labour market and the low ceiling of economic potential suggests this could change. What may trigger a change of view, other than wage pressure and the cost that negative rates place on the solvency of pension and life funds, remains to be seen. Importantly, investment banks are now virtually precluded from market making and on account of the frantic crowding with over US\$13 trillion invested in sovereign bonds in negative territory, the turn could be dramatic and painful, even if interest rate levels subsequently settle back to modest levels, by historic standards. Do remember, the amount of public and private debt has ballooned by US\$60 trillion since 2008 and now totals some \$200 trillion, or three times global GDP.

There is a new zag in prospect as policy switches to the inevitable need for fiscal augmentation of monetary policy. It is quite possible that the focus turns back to Asia where economies are growing much faster than in the west, government and private finances are sound, interest rates attractive and huge current account surpluses are being enjoyed. This should be of benefit to Platinum's portfolio positioning and style, as the game broadens out.

Investment Performance

As was suggested above, the investment climate has not been conducive to our investment style and our largest fund has suffered a period of sub-par investment performance. In the five years to July 2016, the Platinum International Fund has cumulatively risen by 81% versus the MSCI by 99%. This is disappointing compared to our historic performance but it benefits you to remember that in calendar 2008 the Fund outperformed the World Index by close to 20% (being down 7.4% versus the MSCI down 27.2%) and again in 2009 the outperformance was over 15%.

Over the last five years, our geographic specific funds of Asia, Europe and Japan have each handily outperformed their peers and the relevant markets. We understand the causes and know from the gains achieved by the geographic specific funds that there is no systematic issue with stock picking notwithstanding the current enthusiasm for Exchange Traded Funds (ETFs). The singular theme of certainty, makes the choice of ETFs interesting at present, but as this priority fades because of valuation disparities being too great, investors will face the very same choices as fund managers do and have to periodically reallocate their portfolios. This cements the long-term attractions of active management, in our view.

The Investment Team

The talent pool has deepened through recruitment and market-hardened experience. There are 29 members of the investment team of which 14 have been with Platinum for 10 years or more.

The designated team leaders are building the rhythm of idea generation and this bodes well for making clients' money. Our quantitative method continues to strengthen and our dealers are contributing deeper market insights

Costs

Staff remains the largest obligation and industry surveys suggest our remuneration packages, with the emphasis on performance enhanced rewards, places the company among the industry leaders.

To reflect the importance of bringing through tomorrow's leaders, we have introduced a new layer of participation. The 'Deferred Bonus Plan' applies across the firm for those leaders we believe will carry the company over the next decade. It entails issuing stock to participants with deferred vesting four years hence. It is envisaged that these grants will be made annually, performance permitting, to allow employees to gradually increase their ownership in the company.

The 'Profit Share Plan' that is dependent upon the weighted average one and three year performance exceeding the benchmark by 1% of all funds under management remains in place.

Funds Under Management (FUM) - retention and growth

At present there is great interest in distribution power, presumably because of the influence that the big five financial institutions exercise over financial advice in Australia. We are fully aware of this argument and without understating the might of these organisations, we know that performance is the characteristic that drives FUM over time. There will always be firms and individuals seeking serious fund managers who have a practiced methodology and that seek to make a difference even though they may have periodic setbacks. Indeed, some of the great names in this industry were founded in the bleak days of the Depression scarred 1930s.

We have gradually grown the team of investment specialist professionals to four in the field. Via active participation they have added considerably to our interaction with financial advisors in Australia and New Zealand. As noted in the past, these are all former analysts and can therefore speak authoritatively about our investment decisions and portfolios rather than simply following a sales script that lacks depth and understanding. To add further to the quality of our communication in the field, individual analysts accompany the investment specialists to visit advisory firms to give additional insights of changes taking place in specific industries. This in turn empowers investment advisors to speak more authoritatively to their clients. This tends to set us apart from the competition! In addition, we have an annual roadshow directed at the financial intermediaries.

Other important aspects of communication revolve around the rising sophistication of the firm's website, which includes features like the investment Journal and this is an on-going project. We hold a biannual meeting with clients where the emphasis is on conveying insights rather than being image-promoting jamborees. The efficacy of this open approach is revealed by the fact that as much as 15% of the audience are friends of unitholders who have been invited to learn about markets.

Other initiatives include the successful launch of the Listed Investment Company, Platinum Asia Investments Limited (PAI) last September and the opening of the Irishbased UCITS (Undertakings for Collective Investments in Transferable Securities) in November. PAI raised close to A\$293 million which includes funding of A\$50 million from Platinum, while the value of funds in the UCITS is at US\$47 million of which Platinum supplied US\$25 million of seeding. We are encouraged by discussions with interested parties to take up units in these products and see them contributing to our income in the coming year.

At present we are investigating alternative packaging of our core products we offer but it should be emphasised that product proliferation is not part of this strategy. We are simply trying to cater to different channels for those seeking equity funds with a global focus.

Funds	Opening Balance (1 July 2015)	Flows	Investment Performance	Distribution	Closing Balance (30 June 2016)	% of total
Retail Funds
Platinum Trust Funds and Platinum Global Fund	19,117	(190)	(1,481)	(907)	16,539	73
Platinum Listed Investment Companies PMC and PAI	398	249	(31)	-	616	3
MLC Platinum Global Fund	1,113	(145)	(50)	-	918	4
Institutional Funds
Management Fee Mandates	1,977	(37)	(91)	-	1,849	8
"Absolute" Performance Fee Mandates	709	(122)	(39)	-	548	2
"Relative" Performance Fee Mandates	3,545	(1,195)	(132)	-	2,218	10
TOTAL	26,859	(1,440)	(1,824)	(907)	22,688	100

Fund Under Management (\$mn, to 30 June 2016)

Source: Platinum

Outlook

While we are currently facing net redemptions, past experience leads us to believe that this is transient. Performance can change remarkably quickly and within several months positive flows tend to follow. Australian investors are more aware than ever about the possibilities of global investing and the need for diversification. The launch of UCITS puts us in a strong position to seek investors abroad and we are pursuing this with energy.

As our whole existence is predicated on markets being driven by fashion and crowding, please believe that our confidence in the future is driven by this understanding rather than complacency.

Kerr Neilson Managing Director

Platinum Asset Management Limited

ABN 13 050 064 287

Financial Report - 30 June 2016

Platinum Asset Management Limited Corporate directory

Directors	Michael Cole Bruce Coleman Margaret Towers Stephen Menzies Kerr Neilson Andrew Clifford Elizabeth Norman Andrew Stannard
Shareholder liaison	Elizabeth Norman
Company secretary	Andrew Stannard (from 29 July 2016)
Registered office	Level 8, 7 Macquarie Place Sydney NSW 2000 Phone 1300 726 700 (Australia only) Phone 0800 700 726 (New Zealand only) Phone +61 2 9255 7500 Fax +61 2 9254 5555
Share registrar	Computershare Investor Services Pty Ltd Level 3, 60 Carrington Street Sydney NSW 2000 Phone 1300 855 080 (Australia only) Phone +61 3 9415 4000 Fax +61 3 9473 2500
Auditor & taxation advisor	PricewaterhouseCoopers 201 Sussex Street Sydney NSW 2000
Securities exchange listing	Platinum Asset Management Limited shares are listed on the Australian Securities Exchange (ASX code: PTM)
Website	www.platinum.com.au/Shareholder-information/
Corporate Governance Statement	www.platinum.com.au/documents/shareholders/ptm_corp_gov.pdf

Platinum Asset Management Limited Shareholder information 30 June 2016

The shareholder information set out below was applicable as at 22 August 2016.

Distribution of equity securities

Analysis of number of equity security holders by size of holding:

	Number of holders of ordinary shares
1 to 1,000	6,769
1,001 to 5,000	15,626
5,001 to 10,000	3,738
10,001 to 100,000	2,050
100,001 and over	70
	28,253
Holding less than a marketable parcel (less than \$500)	249

Equity security holders

Twenty largest quoted equity security holders

The names of the 20 largest security holders of quoted equity securities are listed below:

	Ordinary shares
		% of total shares
	Number held	issued
J Neilson	156,037,421	26.60
K Neilson	156,037,420	26.60
HSBC Custody Nominees (Australia) Limited	31,165,669	5.31
Platinum Investment Management Limited (nominee)	30,161,650	5.14
JP Morgan Nominees Australia Limited	19,392,561	3.31
Citicorp Nominees Pty Limited	17,370,503	2.96
National Nominees Limited	9,491,659	1.62
RBC Investor Services Australia Nominees Pty Limited	9,485,948	1.62
Jilliby Pty Limited	6,500,000	1.11
J Clifford	5,000,000	0.85
Charmfair Pty Limited	4,240,694	0.72
Charmfair Pty Limited	3,472,269	0.59
BNP Paribas Nominees Pty Limited	2,838,712	0.49
Xetrov Pty Limited	2,000,000	0.34
UBS Nominees Pty Limited	1,476,753	0.25
Navigator Australia Limited	1,008,125	0.17
HSBC Custody Nominees (Australia) Limited	1,004,384	0.17
Warbont Nominees Pty Limited	998,729	0.17
Jilliby Pty Limited	725,000	0.12
Bond Street Custodians Limited	650,000	0.11
	459,057,497	78.25

Unquoted equity securities

There are no unquoted equity securities, however under the Deferred Bonus Plan, 591,578 deferred rights were allocated to eligible employees of Platinum, and on vesting and exercise of these rights, an equivalent number of PTM shares that have already been acquired on-market will be allocated to these employees. Therefore, no new shares will be issued under the Deferred Bonus Plan (please refer to the Remuneration Report and Note 20 for further details).

Platinum Asset Management Limited Shareholder information 30 June 2016

Substantial shareholders

The following parties have notified the Company that they have a substantial relevant interest in the ordinary shares of Platinum Asset Management Limited in accordance with section 671B of the Corporations Act 2001:

	Ordinary shares	% of total shares
	Number held	issued
J Neilson, K Neilson J Clifford, Moya Pty Limited, A Clifford	312,074,841 32,831,449	53.2^ 5.9^

^ based on the last substantial shareholder notice lodged.

Voting rights

The voting rights attached to ordinary shares are as follows:

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

There are no other classes of equity securities.

Employees that have been allocated deferred rights under the Deferred Rights Plan, have no entitlement to vote, attend meetings of shareholders or receive dividends, until the deferred rights have been exercised (Refer to the Remuneration Report and Note 20 for further details).

Distribution of Annual Report to Shareholders

The Law allows for an "opt in" regime through which shareholders will receive a printed "hard copy" version of the Annual Report only if they request one. The Directors have decided to only mail out an Annual Report to those shareholders who have "opted in".

Financial Calendar

31 August 2016 - Ordinary shares trade ex-dividend 1 September 2016 - Record (books close) date for dividend 22 September 2016 - Dividend paid These dates are indicative and may be changed.

Notice of Annual General Meeting

The details of the Annual General Meeting (AGM) of Platinum Asset Management Limited are: 10am Thursday 17 November, 2016 Marble Room Radisson Blu Plaza Hotel Sydney 27 O'Connell Street Sydney NSW 2000

Questions for the AGM

If you would like to submit a question prior to the AGM to be addressed at the AGM, you may e-mail your question to invest@platinum.com.au.

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity' or 'group') consisting of Platinum Asset Management Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2016.

Directors

The following persons were Directors of Platinum Asset Management Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Michael Cole	Chairman and Non-Executive Director
Bruce Coleman	Non-Executive Director
Margaret Towers	Non-Executive Director
Stephen Menzies	Non-Executive Director
Kerr Neilson	Managing Director
Andrew Clifford	Executive Director and Chief Investment Officer
Elizabeth Norman	Executive Director and Director of Investor Services and Communications
Andrew Stannard	Executive Director and Chief Financial Officer (appointed 10 August 2015)

Other Board Appointed Officers of the Company

Mark Aggarwal was Acting Chief Financial Officer until 10 August 2015, when Andrew Stannard joined the firm.

Marcia Venegas was Chief Compliance Officer until 20 November 2015. Matthew Githens was appointed as Chief Compliance Officer from 23 November 2015.

Janna Vynokur was Company Secretary of the Company for the full financial year, before resigning on 29 July 2016. Andrew Stannard was appointed interim Company Secretary of the Company on 29 July 2016.

Principal Activities

The Company is the non-operating holding company of Platinum Investment Management Limited and its controlled entities. Platinum Investment Management Limited, trading as Platinum Asset Management, operates a funds management business.

Operating and Financial Review

The ability of our Funds and mandates to attract new capital is ultimately dependent on our long term investment performance. The high level of market volatility experienced during the year triggered investment uncertainty which, in turn, adversely affected performance, fund inflows and Funds Under Management (FUM).

Despite the drop in year-on-year closing FUM from \$26.9 billion to \$22.7 billion, average FUM, which drives our fee revenue, only decreased by 1.2% or \$0.3 billion to \$25.8 billion. This limited the fall in fee revenue to 0.9%, with full year fee revenue totalling \$337.9 million (2015: \$340.9 million).

Total revenue declined by 4.4% or \$15.7 million to \$344.7 million (2015: \$360.4 million), mostly due to mark-to-market losses from our US Dollar cash holdings and investments.

During 2016 we held about half of our cash holdings in US Dollars and the other half in Australian Dollars. Gains made on the USD cash holding totalled \$5.1 million, substantially less than \$16.9 million generated in 2015 because of the large favourable currency movement that occurred in that year (the AUD/USD exchange rate fell from 94 cents down to 76 cents between 1 July 2014 and 30 June 2015).

Falling equity markets also caused unrealised, non-cash, losses on our co-investment in Platinum's new Listed Investment Company, Platinum Asia Investments Limited ("PAI") of \$1.5 million and losses on the investment in the new Irish offshore fund, Platinum World Portfolios Plc ("PWP") of \$1.4 million.

Costs increased by 6.1% or \$3.6 million relative to the prior year, driven mainly by a \$2.5 million increase in staff costs and a \$1.0 million increase in costs associated with our business development strategy. There were some savings on custody costs.

Profit before income tax expense was \$282.2 million (2015: \$301.6 million) and the profit after tax for the year was \$199.9 million (2015: \$213.5 million). Both of these profit numbers represent a decrease of 6.4% from the prior year.

The 30 June 2016 closing FUM was \$22.7 billion, and this represents a decrease of 15.5% or \$4.2 billion from the 30 June 2015 closing FUM of \$26.9 billion. The first few months of the year were positive from a FUM point of view and the average FUM for the year to 30 June 2016 decreased by only 1.2% or \$0.3 billion to \$25.8 billion, compared to an average FUM of \$26.1 billion for the previous year.

The decline in FUM over the course of the current year was caused by a decline in absolute investment returns of \$1.8 billion and investment outflows of \$2.4 billion (inclusive of the 30 June 2016 net distribution of \$0.9 billion).

Despite the downturn in FUM there were nonetheless several notable highlights in the year including the success of the Platinum Asia Investments Limited Listed Investment Company ("LIC") Initial Public Offer ("IPO") which raised \$292.9 million.

We also launched a new Undertakings for Collective Investment in Transferable Securities ("UCITS") offshore fund, called Platinum World Portfolios Plc. This Irish fund is now being actively marketed globally, showcasing Platinum's strong longterm record of out-performance which sets us apart from the majority of fund managers in the industry. It has begun to attract some serious overseas client interest.

The uncertainty in global macroeconomic and geopolitical affairs ("Brexit" being the most recent example) has resulted in the overwhelming majority of fund managers investing in the supposedly "safer" US market. However, our view is that expectations about future earnings growth in the US appear unrealistically high so, in contrast to other managers, Platinum prefers to focus on companies that have attractive valuations in long-term growth regions, such as Asia.

We believe it is imperative that investors are kept as fully informed as possible. As a result, we have increased the resources dedicated to explaining the characteristics and benefits of our products and communicating our investment strategy to advisors and their clients.

The Company is in a strong financial position, with a strong balance sheet. That said, the most significant driver of sustainable future growth is, and will always be, the delivery of superior, long-term, risk adjusted returns for our clients.

Notwithstanding this year's set-back with respect to FUM growth, we remain positive about our future prospects. In particular, we note the increasing trend for Australian investors to raise their exposure to global shares, the strengthening of our relationship with the investor community and the continued growth of the self-managed superannuation fund ("SMSF") sector.

Dividends

Since the end of the financial year, the Directors have declared a 16 cents per share (\$93,773,971) fully-franked ordinary dividend, with a record date of 1 September 2016 and payable to shareholders on 22 September 2016.

A fully-franked ordinary dividend of 16 cents per share (\$93,868,624) was paid on 22 March 2016.

A fully-franked ordinary dividend of 20 cents per share (\$117,335,780) was paid on 22 September 2015.

Significant Changes in the State of Affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial year.

Matters Subsequent to the End of the Financial Year and Expected Results of Operations

Since the end of the financial year, the Directors are not aware of any matter or circumstance, not otherwise dealt with in this report or financial statements that has significantly affected, or may significantly affect, the operations of the consolidated entity or the results of its operations in subsequent financial periods.

Environmental Regulation

The consolidated entity is not subject to any significant environmental regulation under Commonwealth, State or Territory law.

Information on Directors

Michael Cole BEcon, MEcon, FFin

Independent Non-Executive Director, Chairman and member of the Audit, Risk & Compliance and Nomination & Remuneration Committees since 10 April 2007. (Age 68)

Mr Cole has over 38 years of experience in the investment banking and funds management industry. Mr Cole was an Executive Director/Executive Vice President at Bankers Trust Australia for over 10 years. Mr Cole is Chairman of Ironbark Capital Limited and IMB Limited.

Bruce Coleman BSc, BCom, CA, FFin

Independent Non-Executive Director, Chair of the Nomination & Remuneration Committee and member of the Audit, Risk & Compliance Committee since 10 April 2007. (Age 66)

Mr Coleman has worked in the finance and investment industry since 1986. He was the CEO of MLC Investment Management from 1996 to 2004. He has held various directorships within MLC Limited, Lend Lease and the National Australia Banking group. Mr Coleman is Chairman and Director of Platinum Capital Limited, Chairman of Resolution Capital Limited and on 24 June 2015, Mr Coleman was appointed Chairman and Director of Platinum Asia Investments Limited.

Margaret Towers CA, GAICD

Independent Non-Executive Director, Chair of the Audit, Risk & Compliance Committee and member of the Nomination & Remuneration Committee since 10 April 2007. (Age 58)

Ms Towers is a Chartered Accountant with over 34 years of experience in financial markets. She was formerly an Executive Vice President at Bankers Trust Australia and worked at Price Waterhouse. Ms Towers acts as an independent consultant and compliance committee member to Australian Financial Institutions. Ms Towers is a Non-Executive Director of IMB Limited.

Stephen Menzies BEcon, LLB, LLM

Independent Non-Executive Director, member of the Audit, Risk & Compliance and Nomination & Remuneration Committees since 11 March 2015. (Age 60)

Mr Menzies is currently a Director of Century Australia Investments Limited and Chairman of the Centre for Quantum Computation & Communication Technology. Mr Menzies retired as a partner at Ashurst law firm last year and until his retirement was consistently ranked as one of Australia's leading corporate lawyers. As Head of China Practice for Ashurst, Mr Menzies oversaw the Shanghai and Beijing offices of that firm. Previously, Mr Menzies was National Director for Enforcement at the Australian Securities Commission and has a long history in the funds management sector. In July 2015, Mr Menzies was appointed a Director of Platinum World Portfolios Plc.

Kerr Neilson BCom, ASIP

Managing Director since 12 July 1993. (Age 66)

Mr Neilson was appointed as Managing Director upon incorporation. He is the Managing Director of Platinum Investment Management Limited. Prior to Platinum, Mr Neilson was an Executive Vice President at Bankers Trust Australia. Previously he worked in both the UK and South Africa in stockbroking.

Andrew Clifford BCom (Hons)

Director and Chief Investment Officer since 8 May 2013. (Age 50)

Mr Clifford joined Platinum as a co-founding member in 1994 in the capacity of Director of Platinum Investment Management Limited and Deputy Chief Investment Officer. Previously he was a Vice President at Bankers Trust Australia covering Asian equities and managing the BT Select Market Trust - Pacific Basin Fund. In May 2013, Mr Clifford was appointed Chief Investment Officer. Mr Clifford is co-manager of Platinum International Fund with Kerr Neilson.

Elizabeth Norman BA, Graduate Diploma in Financial Planning

Director of Investor Services and Communications since 8 May 2013. (Age 48)

Ms Norman joined Platinum in February 1994 in a role of Investor Services and Communications Manager. Previously she worked at Bankers Trust Australia in product development and within the retail funds management team. Ms Norman's role as a Director of Investor Services and Communications reflects the widening of Platinum's client base and the consolidated entity's commitment to supporting retail and institutional clients with dedicated investment specialists.

Andrew Stannard BMS(Hons), Graduate Diploma in Applied Finance and Investment, CA Director and Chief Financial Officer since 10 August 2015. (Age 49)

Mr Stannard joined Platinum from AllianceBernstein where he held the position of Chief Financial Officer for the Asia-Pacific region. Mr Stannard has 26 years of finance experience with expertise in audit, financial control, operations, funds management, financial services regulation and corporate governance.

Meetings of Directors

The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2016, and the number of meetings attended by each Director were:

	Board		Nomination & Remuneration Committee		Audit, Risk & Compliance Committee
	Attended	Held	Attended	Held	Attended	Held
Michael Cole	4	4	3	3	4	4
Bruce Coleman	4	4	3	3	4	4
Margaret Towers	4	4	3	3	4	4
Stephen Menzies	4	4	3	3	4	4
Kerr Neilson	4	4	-	-	-	-
Andrew Clifford	4	4	-	-	-	-
Elizabeth Norman	4	4	-	-	-	-
Andrew Stannard	4	4	-	-	-	-

Indemnity and Insurance of Officers

During the year, the Company incurred a premium in respect of a contract for indemnity insurance for the Directors and Officers of the Company named in this report.

Indemnity and Insurance of Auditor

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Non-Audit Services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in Note 19 to the financial statements.

The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in Note 19 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110: Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board.

Rounding of Amounts

The Company is of a kind referred to in ASIC Corporations "Rounding in Financial/Directors' Reports" Instrument, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 17.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

______________________________ ______________________________

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the Directors

Michael Cole Kerr Neilson Chairman Director

25 August 2016 Sydney

Introduction

The Company's Directors present the Remuneration Report prepared in accordance with section 300A of the Corporations Act 2001 for the Company and consolidated entity for the year ended 30 June 2016. The Remuneration Report forms part of the Directors Report.

The information provided in this Remuneration Report has been audited by the Company's auditor, PricewaterhouseCoopers, as required by section 308 (3C) of the Corporations Act 2001.

Summary of Remuneration Outcomes for 2016

• the Managing Director waived his ability to receive a bonus in 2016 and this was ratified by the Nomination & Remuneration Committee;
• As a result of investment underperformance by our Funds and Mandates and the associated decline in Funds Under Management ("FUM"), Andrew Clifford did not receive a bonus in 2016;
• The underperformance of our funds and lower revenues also affected the bonuses paid to all other Platinum employees. With the exception of a very small group of employees who each made outstanding contributions to the business over a number of years, bonuses were generally flat year on year and salary increases modest;
• There were no payments made under the Profit Share Plan ("PSP") to any staff;
• Only two members of Key Management Personnel ("KMP") received a bonus in 2016, being the Director of Investment Services and Communications, Elizabeth Norman and the Finance Director, Andrew Stannard;
• A new "Deferred Bonus Plan" was approved by the Nomination & Remuneration Committee. The main objective of the Plan is to recognise the contributions made by key employees and to retain their skills within the firm. Selected employees will have a proportion of their bonus deferred in the form of deferred rights. The rights will become convertible to shares in Platinum Asset Management Limited (PTM) after four years, if the key employees remain employed at Platinum. In the current year, \$3,650,000 in employee bonuses were deferred under this plan. PTM shares were acquired by an Employee Share Trust on-market and therefore did not dilute existing shareholders;
• Only one member of KMP, Elizabeth Norman received a deferred bonus. The total of her deferred bonus was \$300,000, which translated into 48,623 deferred rights. This was calculated by dividing the bonus amount by the Volume Weighted Average Price (VWAP) of PTM shares for the seven (7) trading days prior to grant date. Elizabeth Norman will consequently have the right to receive 48,623 PTM shares if she remains employed at Platinum for a further four years (to 20 June 2020); and
• The 2016 financial year represents the first full year that the remuneration arrangements adopted in April 2015, were applied to the Non-Executive Directors. The specific responsibilities that each Non-Executive Director has are identified and remuneration is then allocated to each of those responsibilities. This re-allocation has occurred without the need to increase the overall amount paid to the individual Non-Executive Directors.

Key Management Personnel ("KMP")

For the purposes of this report, KMP of the consolidated entity in office at any time during the financial year were:

Name	Position
Michael Cole	Chairman and Non-Executive Director
Bruce Coleman	Non-Executive Director
Margaret Towers	Non-Executive Director
Stephen Menzies	Non-Executive Director
Kerr Neilson	Managing Director
Andrew Clifford	Executive Director and Chief Investment Officer (CIO)
Elizabeth Norman	Executive Director and Director of Investor Services and Communications
Andrew Stannard	Executive (Finance) Director (since 10 August 2015)

There were no employees that held a KMP position within the Company or consolidated entity, other than those disclosed above.

Shareholders' Approval of the 2015 (prior year) Remuneration Report

A 25% or higher "no" vote on the Remuneration Report at an AGM triggers a reporting obligation on a listed company to explain in its next Annual Report how concerns are being addressed. At the last AGM, the Company's Remuneration Report was carried on a poll and received a vote in favour of 96.89%. Platinum takes the opportunity to fully explain the basis and structure of the remuneration paid to KMP.

Guiding Principles of KMP and Staff Remuneration

The business of Platinum is to manage clients' money with the goal of providing superior investment returns over the medium to long-term. Platinum's position is simple: if Platinum continues to responsibly and successfully manage the money of its clients then, over time, the Funds Under Management ("FUM") of the firm will increase, and so will the profits of the Platinum Group.

As at 30 June 2016, the flagship Platinum International Fund ("PIF") had achieved an average compound annual return of 12.3% since its inception in 1995, compared to 6.1% for the MSCI All Country World Net Index. This means that over time investors have been able to generate very solid absolute and relative returns, despite the Fund having lower net exposure (and therefore less risk) to the market, in keeping with the Fund's stated absolute return focus.

In more recent times, the road has been bumpy and our limited US exposure has stood in stark contrast to the composition of the benchmark, but as price is the best predictor of future returns, we remain comfortable with the composition of the portfolios.

In order to achieve these strong medium and long-term returns for investors, Platinum has built and developed a team of highly skilled investment professionals. As previously noted, the key variable in determining investment team remuneration is investment returns. Consideration is given to overall returns earned by all clients, as well as the contribution made by individual members of the investment team as a result of their specific investment ideas. The performance of other essential members of the Platinum team, such as client services and corporate and fiduciary functions, are assessed against predetermined operational performance indicators that are relevant to each employee.

Some firms prefer to focus on simpler performance metrics such as Total Shareholder Return (TSR) as a basis for designing KMP and employee remuneration structures. TSR measures share price appreciation or depreciation plus dividend reinvestment between two points in time. Whilst, over long periods of time, TSR will usually reflect the underlying performance of a company's business, it is Platinum's view that there are a number of issues in using TSR as a variable in employee remuneration. Shorter term variables, such as the macroeconomic environment or interest rates, are factors outside of the control of employees, but can overwhelm underlying developments in the business, and determine a Company's share price. The result is that employees may be either unduly rewarded or punished by variables outside of their control. The use of TSR as an incentive, in our view, may encourage a focus on short-term outcomes such as current year earnings, or short term investment returns, potentially at the expense of longer term business outcomes.

In conclusion, Platinum's position is that if we provide good investment returns to our clients, along with a high level of customer service, FUM and profits will grow and, as a result, shareholders will benefit as a result of an appreciating business value. Accordingly, Platinum's Remuneration Policy aims to reward staff in line with the contribution that they have made to delivering these objectives and outcomes.

Structure of Remuneration for Directors and all Platinum staff

Fixed remuneration consists of salary and compulsory superannuation contributions. Salaries approximate market rates and took into account the contribution, skill and experience of each employee.

Variable remuneration consists of performance bonuses and profit share amounts. Bonuses are discretionary and are paid after assessing individual performance against a range of qualitative and quantitative factors specific to each employee. Bonuses take the form of an annual cash payment or deferred award and are designed to reward superior performance. The Platinum Group has established various Short-Term Incentive Plans ("STIP"), as the basis for rewarding staff. These are discussed below.

Short-Term Incentive Plans

Investment Team Plan (applies to members of the investment team only)

A remuneration framework for investment team bonuses has been ratified by the Nomination & Remuneration Committee. Under this framework, the bonus pool was determined as a percentage of the aggregate base salary of the investment team. The percentage level was related to the average of 1 year and 3 year outperformance of all funds under management. For each 1% increase in this average outperformance, the bonus pool is increased by 20% and is then capped when average outperformance is 5% or more.

The bonus pool is then allocated across members of the investment team based on performance assessments that are based on both quantitative and qualitative measures. In a period where there is aggregate underperformance of client funds, annual bonuses for investment team members are then determined by an individual assessment of each employee's contribution to the investment team during the period. Quantitative measures used to assess individual performance include the performance of any portfolios under the management of an individual and the performance of individual investment

ideas that have been proposed. Investment performance is usually assessed over a 1 year and 3 year time frame and is relative to an appropriate benchmark.

As investment returns in the current period were below benchmarks, no payments were made under the plan in the current or prior year.

Profit Share Plan (PSP) (applies to members of the investment team only)

The Nomination & Remuneration Committee ratified the PSP in 2014. The PSP was designed to reward key members of the team for helping in the development of Platinum's business through strong investment performance (relative to benchmarks). Individual members of the investment team were issued notional units in the profit share plan. The notional units have no capital value and cannot be sold or transferred to a third party. Notional units are adjusted each year based upon the assessment of each staff member's long-term contribution potential to the future development of the group. Each year the profit share percentage is determined based upon the weighted average 1 year and 3 year outperformance of all funds under management. For example, if the average of the 1 and 3 year rolling performance of our Funds exceeds the weighted benchmark by 2.5%, then 1.5% of the Company's fee-based net profit before tax is made available to this pool.

There is no profit share until weighted average 1 year and 3 year outperformance is greater than 1%, inclusive of prior year underperformance carry forward. The profit share figure is limited to 5% of profit before tax, though the Nomination and Remuneration Committee may elect to carry this over to future periods if investment returns indicate a profit share in excess of the 5% level. There were no payments made under the Profit Share Plan in the current or prior year.

General Employee Plan

Performance was assessed against pre-determined operational performance indicators relevant to each employee as assessed by the Directors of the Platinum Group and ratified by the Nomination & Remuneration Committee. These performance indicators took into account the responsibilities, skill and experience of each employee and their contribution during the year, and emphasised the fact that the business is run extremely efficiently with a total number of non-investment employees of 54, despite total FUM at 30 June 2016 being \$22.7 billion. With the exception of a very small group of employees who have each made outstanding contributions to the business over a number of years, bonuses paid to employees in 2016 were generally flat and salary increases limited.

Deferred Bonus Plan

On 2 June 2016, a new "Deferred Bonus Plan" was approved by the Nomination & Remuneration Committee. The main objectives of the Plan are to recognise the contributions made by key employees and to retain their skills within the firm. Eligible employees are selected by the Nomination & Remuneration Committee during the annual bonus cycle and the proportion of each bonus that is deferred varies by employee. The number of deferred rights are determined by dividing the discretionary deferred bonus amount allocated to each eligible employee by the PTM share price, using a volume weighted average price (VWAP) of the PTM shares over the seven (7) trading days prior to the grant date. If an eligible employee remains employed at Platinum after the four year vesting period expires, the employee has a further five years to exercise their deferred right. If an employee resigns from Platinum before they have met the service condition then, in most circumstances, the deferred rights will be forfeited.

It is anticipated that further grants will occur in the future, most likely in June of each year. In order to satisfy the obligation to the Company that arises from the granting of deferred awards, the Company also intends, over time, to purchase shares onmarket and hold these shares within an Employee Share Trust. On vesting, eligible employees will receive one ordinary share in PTM from the Employee Share Trust in satisfaction of each of their rights. No fee is payable by any eligible employee on either grant or on exercise. There is flexibility for the Board to pay cash to the eligible employee on vesting, but the current plan envisages allocating PTM shares only.

Eligible employees will have no voting or dividend rights until their deferred rights have been exercised and their shares have been allocated. However, the deferred rights also carry an entitlement to a Dividend Equivalent Payment. Upon the valid exercise of a deferred right, or deemed exercise, of a deferred right, an eligible employee will be entitled to receive an amount approximately equal to the amount of dividends that would have been paid to the eligible employee had they held the share from the grant date to the date that the deferred rights are exercised.

For the year ended 30 June 2016, total deferred employee bonuses were \$3,650,000. The corresponding number of rights to receive Company (PTM) shares was 591,578 using a volume weighted average price (VWAP) of \$6.17 over the seven trading days prior to the grant date (20 June 2016). As noted above, these PTM shares will ultimately only be allocated if the eligible employee(s) remain employed at Platinum for a period of four years from the grant date.

Between 21 June 2016 and 23 June 2016, the consolidated entity, through its Employee Share Trust purchased \$3,638,073 worth of PTM shares on-market (with \$9,128 being spent on brokerage and GST and the balance of \$2,799 still un-spent

but reserved for ongoing bank fees and charges) and will hold these shares until the vesting date of 20 June 2020 (four years) and subsequent exercise by the eligible employees. No new shares will be issued under the Plan and hence existing shareholders were not diluted.

Impact of these Plans on the Bonuses paid to Executive Directors

Andrew Clifford

Andrew Clifford's bonus was based on his role as Platinum's Chief Investment Officer and Co-Manager of Platinum International Fund and is based on the Investment Team Plan.

As a result of investment underperformance by our Funds and Mandates and the associated decline in Funds Under Management, Andrew Clifford did not receive a bonus in 2016.

Elizabeth Norman

The bonus of Elizabeth Norman was determined according to the General Employee Plan, as Elizabeth is not an Investment Analyst. For the year ended 30 June 2016, the total cash bonus paid to Elizabeth Norman was \$1,100,000.

In addition, Elizabeth Norman received an allocation under the Deferred Bonus Plan. The total deferred bonus was \$300,000, which translated into 48,623 deferred rights, calculated by dividing the bonus amount by the Volume Weighted Average Price (VWAP) of PTM shares for the seven (7) trading days prior to grant date. Elizabeth Norman will receive 48,623 PTM shares if she remains employed at Platinum for a further four years (to 20 June 2020).

Elizabeth Norman was the only KMP to receive an allocation under the Deferred Bonus Plan.

Elizabeth Norman's bonus and allocation under the Deferred Bonus Plan reflected her role as Director of Investor Services and Communications and her leadership and involvement in the launch and/or development of several initiatives during the year, including the IPO Platinum Asia Investments Limited (ASX code: PAI), launching new UCITS fund in Europe, new brand initiatives, and expanding our communication efforts with both advisors and investors.

Andrew Stannard

On 10 August 2015, Andrew Stannard was appointed as Platinum's Finance Director.

The bonus paid to Andrew Stannard was determined according to the General Employee Plan. For the year ended 30 June 2016, the total cash bonus paid to Andrew Stannard was \$300,000.

The bonus paid to Andrew Stannard reflected the leadership and strategic input that he provided into various development opportunities for the business, including the legal and regulatory requirements associated with the launch and ongoing administration of the UCITS fund and Platinum Asia Investments Limited, developing our new Deferred Bonus Plan, enhancing our corporate communications to analysts and shareholders, and improving the technology footprint of the firm.

Kerr Neilson

Kerr Neilson continued to waive his ability to receive a bonus. This has been ratified by the Nomination & Remuneration Committee.

Long-Term Incentive Plans

The Platinum Group has two long-term incentive plans in place, being:

• Options and Performance Rights Plan (OPRP); and
• Fund Appreciation Rights Plan (FARP).

There was no allocation under either plan in the current or prior year.

Details of remuneration of Executive Directors

The table below presents the remuneration provided by the consolidated entity to the Executive Directors of the consolidated entity, in accordance with accounting standards.

				Short-term	Long-term
	Cash Salary	Other (1)	Superannuation	Incentives (2)	Incentives (3)	Total
	\$	\$	\$	\$	\$	\$
2016
Kerr Neilson (4)	450,000	19,392	19,308	-	-	488,700
Andrew Clifford	425,000	19,162	19,308	-	-	463,470
Elizabeth Norman	400,000	22,429	19,308	1,152,200	-	1,593,937
Andrew Stannard (5)	358,976	5,954	19,308	300,000	-	684,238
(from 10 August 2015)
	1,633,976	66,937	77,232	1,452,200	-	3,230,345
2015
Kerr Neilson (4)	450,000	12,590	18,784	-	-	481,374
Andrew Clifford	425,000	(11,793)	18,784	425,000	-	856,991
Elizabeth Norman	400,000	14,004	18,784	700,000	-	1,132,788
Philip Howard	358,974	(24,706)	16,858	-	-	351,126
(until 25 May 2015)
	1,633,974	(9,905)	73,210	1,125,000	-	2,822,279

(1) represents the increase/(decrease) in the accounting provision for annual and long service leave. These amounts were not received by the Executive Directors and represent provisions made in the consolidated entity's statement of financial position.

(2) see the Short-Term Incentive Plan section above for further details. The short-term incentive attributable to Elizabeth Norman is comprised of (i) a cash bonus of \$1,100,000 and (ii) the accounting valuation of \$52,200 attributable to Elizabeth Norman with respect to the allocation of 48,623 deferred rights under the Deferred Bonus Plan.

(3) There were no long-term incentives (options or fund appreciation rights) granted in the current or prior year.

(4) The Managing Director, Kerr Neilson, waived his right to receive a bonus and this has been ratified by the Nomination & Remuneration Committee.

(5) The remuneration of Andrew Stannard covers the period from the date of his appointment on 10 August 2015 to 30 June 2016.

Components of Remuneration

The table below illustrates the relative proportions of fixed and variable remuneration as a percentage of total remuneration extrapolated from the "Details of remuneration of Executive Directors" table.

	Fixed remuneration as a percentage of total remuneration (1)	Variable remuneration as a percentage of total remuneration (2)
2016
Kerr Neilson	100%	0%
Andrew Clifford	100%	0%
Elizabeth Norman	28%	72%
Andrew Stannard	56%	44%
2015
Kerr Neilson	100%	0%
Andrew Clifford	50%	50%
Elizabeth Norman	38%	62%
Philip Howard	100%	0%

(1) Fixed remuneration refers to salary, superannuation and provisions or payments made for annual and long service leave.

(2) Variable remuneration refers to short and long-term incentive payments. Only short-term incentive payments were made in the current year (being cash bonuses paid to Andrew Stannard and Elizabeth Norman and the accounting valuation attributable to Elizabeth Norman based on the allocation of deferred rights under the Deferred Bonus Plan).

Remuneration of Non-Executive Directors

Remuneration Policy

The Company's remuneration policy for Non-Executive Directors is designed to ensure that the Company can attract and retain suitably-qualified and experienced directors.

It is the policy of the Board to remunerate at market rates. Non-Executive Directors received a fixed fee and mandatory superannuation payments. Non-Executive Directors do not receive bonuses and are not eligible to participate in any equitybased incentive plans. The Executive Directors examine the base pay of the Non-Executive Directors annually and may utilise the services of an external advisor.

The Executive Directors determined the remuneration of the Non-Executive Directors within the maximum approved shareholder limit. The aggregate amount of remuneration that can be paid to the Non-Executive Directors, which was approved by shareholders at a general meeting in April 2007, was \$2 million per annum (including superannuation).

Remuneration Structure

From 1 April 2015, the Nomination & Remuneration Committee recommended the Non-Executive Director remuneration structure change to a model that aligns with the various roles and responsibilities that the Non-Executive Directors perform in relation to their work-load and attendance at the Board and Board Committees.

This structure is better-aligned with other ASX 200 companies, where the specific role is identified and the remuneration component is allocated to that role. This change occurred from 1 April 2015, without an increase in the overall amount paid to the individual Non-Executive Directors. The 2016 financial year represents the first full financial year that the new remuneration structure and arrangements have been in place. The following table displays the current Non-Executive Directors and their key roles:

Non-Executive	Michael Cole	Margaret Towers	Bruce Coleman	Stephen Menzies
Director
Board	Chair	Member	Member	Member
Audit, Risk &	Member	Chair	Member	Member
Compliance Committee
Nomination &	Member	Member	Chair	Member
Remuneration
Committee

The table below shows how the remuneration paid is allocated.

Non-Executive	Michael Cole	Margaret Towers	Bruce Coleman	Stephen Menzies
Director
Board (1)	\$170,000	\$130,000	\$130,000	\$130,000
Audit, Risk &	\$15,000	\$30,000	\$15,000	\$15,000
Compliance Committee
Nomination &	\$15,000	\$15,000	\$30,000	\$15,000
Remuneration
Committee
Total	\$200,000	\$175,000	\$175,000	\$160,000

(1) All Non-Executive Directors are paid \$130,000 as a Director, with the Chairman receiving a supplement of \$40,000 for his additional responsibilities.

The structure aligns the remuneration paid to each Non-Executive Director to their responsibilities and roles.

No other retirement benefits (other than mandatory superannuation) are provided to the Non-Executive Directors. There are no termination payments payable on the cessation of office and any Director may retire or resign from the Board, or be removed by a resolution of shareholders. The Constitution of the Company requires approval by shareholders at a general meeting of a maximum amount of remuneration to be paid to the Non-Executive Directors.

Remuneration of Non-Executive Directors

The table below presents actual amounts received by the Non-Executive Directors.

	Cash Salary \$	Superannuation \$	Short-term Incentives \$	Long-term Incentives \$	Total \$
2016
Michael Cole	200,000	19,000	-	-	219,000
Margaret Towers	175,000	16,625	-	-	191,625
Bruce Coleman	175,000	16,625	-	-	191,625
Stephen Menzies	160,000	15,200	-	-	175,200
	710,000	67,450	-	-	777,450
2015
Michael Cole	200,000	18,784	-	-	218,784
Margaret Towers	175,000	16,625	-	-	191,625
Bruce Coleman	175,000	16,625	-	-	191,625
Stephen Menzies (appointed 11 March 2015)	49,026	4,657	-	-	53,683
	599,026	56,691	-	-	655,717

The prior year remuneration for Stephen Menzies covers the period from the date of his appointment to 30 June 2015. In addition, Mr Menzies is Platinum Investment Management Limited's (PIMLs) nominee on the Board of the offshore UCITS fund, Platinum World Portfolios Plc ("PWP"). PWP was formed prior to its formal commencement of trading on 17 November 2015. As a result, PIML paid Mr Menzies a payment of Directors Fees of Euro 10,000 (equivalent to A\$15,728). Subsequent Directors Fees were paid by PWP itself, with the second payment of Euro 10,000 (equivalent to A\$14,605) paid on 25 April 2016.

The key aspects of the KMP contracts are outlined below:

• Remuneration and other terms of employment for Non-Executive Directors are formalised in letters of appointment. The appointment term for each Director, except for the Managing Director, is three years.
• All contracts (both Executive and Non-Executive) include the components of remuneration that are to be paid to KMP and provide for annual review, but do not prescribe how remuneration levels are to be modified from year to year.
• The tenure of all Directors, except for the Managing Director, is subject to approval by shareholders at every third AGM or other general meeting convened for the purposes of election of Directors.
• In the event of termination, all KMP are entitled to receive their statutory leave entitlements and superannuation benefits. In relation to incentive plans, upon termination, where an Executive resigns, short-term incentives are only paid if the Executive is employed at the date of payment. The Board retains discretion to still make short-term incentive payments in certain exceptional circumstances, such as bona-fide retirement.
• All Executive Directors can terminate their appointment by providing three months' notice.
• Non-Executive Directors may resign by written notice to the Chairman and where circumstances permit, it is desirable that reasonable notice of an intention to resign is given to assist the Board in succession planning.

Link between performance and remuneration paid by the consolidated entity

	2016	2015	2014	2013	2012
Revenue (\$'000)	344,658	360,422	319,796	232,152	226,727
Expenses (\$'000)	62,464	58,872	58,751	48,983	47,279
Operating profit after tax (\$'000)	199,870	213,499	189,867	129,112	126,378
Basic earnings per share (cents per share)	34.24	36.66	32.79	22.92	22.51
Total dividends (cents per share)	32	47	34	22	21
Total aggregate fixed remuneration paid (\$) (1)	2,518,991	2,362,901	2,346,251	1,832,625	1,794,650
Total aggregate variable remuneration paid (\$) (2)	1,452,200	1,125,000	2,554,650	852,500	414,000

• (1) Total aggregate fixed remuneration paid represents salaries and superannuation (and includes the Director's Fees disclosed on the previous page and paid to Stephen Menzies for his Directorship of the UCITS fund). The total aggregate fixed remuneration figure is higher in the last three financial years (2016, 2015 and 2014) because two new Directors were appointed in May 2013 and therefore the remuneration over the last three years reflects the appointment of two additional Directors.
• (2) Total aggregate variable remuneration paid represents short-term incentive bonuses. The variable remuneration figure was highest in 2014 primarily because a Profit Share Plan (PSP) incentive allocation was made to Andrew Clifford in that year.

Interests of Non-Executive and Executive Directors in shares

The relevant interest in ordinary shares of the Company that each Director held at balance date was:

	Opening balance	Additions	Disposals	Closing balance
Michael Cole	200,000	-	-	200,000
Bruce Coleman	25,000	-	-	25,000
Margaret Towers	20,000	-	-	20,000
Stephen Menzies	30,000	-	-	30,000
Kerr Neilson	312,074,841	-	-	312,074,841
Andrew Clifford	32,831,449	-	-	32,831,449
Elizabeth Norman	766,748	-	-	766,748
Andrew Stannard	-	-	-	-

There were no acquisitions or disposals made during the year by any of the Directors.

Directors' interests in contracts

The Directors received remuneration and dividends that are ultimately derived from the net income arising from Platinum Investment Management Limited's investment management contracts.

Use of external remuneration consultants

The consolidated entity engaged the services of PricewaterhouseCoopers to provide the Nomination & Remuneration Committee with recommendations associated with the implementation of the Deferred Bonus Plan.

PricewaterhouseCoopers were subsequently engaged to assist with the full implementation and roll-out of the Plan. The amount paid or payable to PricewaterhouseCoopers for the provision of these services in FY 2016 was \$46,433.

Contents

Consolidated Statement of profit or loss and other comprehensive income	19
Consolidated Statement of financial position	20
Consolidated Statement of changes in equity	21
Consolidated Statement of cash flows	22
Notes to the financial statements	23
Directors' declaration	57
Independent auditor's report to the members of Platinum Asset Management Limited	58

General information

The financial statements cover Platinum Asset Management Limited as a consolidated entity consisting of Platinum Asset Management Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Platinum Asset Management Limited's functional and presentation currency.

Platinum Asset Management Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 8, 7 Macquarie Place Sydney NSW 2000

A description of the nature of the consolidated entity's operations and its principal activities are included in the Directors' Report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 25 August 2016. The Directors have the power to amend and reissue the financial statements.

Platinum Asset Management Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2016

		Consolidated
	Note	2016 \$'000	2015 \$'000
Revenue
Management fees		319,633	322,124
Performance fees		2,613	2,329
Administration fees		15,648	16,441
		337,894	340,894
Other income
Interest		4,068	7,093
(Loss) on equity investment in associate	21	(2,254)	-
(Losses) on financial assets at fair value through profit or loss Net foreign exchange gains on overseas bank accounts		(661) 5,142	(3,829) 16,898
Net gains/(losses) on forward currency contracts, dividends and distributions		469	(634)
Total revenue and other income		344,658	360,422
Expenses Staff		(30,443)	(27,900)
Custody, administration, trustee and unit registry		(14,219)	(16,268)
Business development		(5,784)	(4,759)
Research		(2,117)	(1,862)
Technology		(1,734)	(1,662)
Rent and other occupancy		(1,647)	(1,742)
Legal and compliance		(1,383)	(1,106)
Depreciation Other professional	8	(965) (951)	(853) (651)
Mail house and periodic reporting		(727)	(598)
Share-based payments	20	(635)	-
Share registry		(593)	(466)
Insurance		(500)	(397)
Audit fee	19	(474)	(456)
Other		(292)	(152)
Total expenses		(62,464)	(58,872)
Profit before income tax expense		282,194	301,550
Income tax expense	4	(82,324)	(88,051)
Profit after income tax expense for the year		199,870	213,499
Other comprehensive income
Reclassification to profit and loss on the disposal of Platinum World Funds Plc. Exchange rate translation impact of foreign subsidiaries	13	- (422)	1,158 4,377
Other comprehensive income for the year, net of tax		(422)	5,535
Total comprehensive income for the year		199,448	219,034
Profit after income tax expense for the year is attributable to:
Owners of Platinum Asset Management Limited		200,887	213,499
Non-controlling interests		(1,017)	-
		199,870	213,499
		Cents	Cents
Basic earnings per share	29	34.24	36.66
Diluted earnings per share	29	34.24	36.66

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

Platinum Asset Management Limited Consolidated statement of financial position As at 30 June 2016

		Consolidated
	Note	2016 \$'000	2015 \$'000
Assets
Current assets
Cash and cash equivalents		119,079	127,679
Equity investment in associate Financial assets at fair value through profit or loss	21 6	47,746 49,452	- 119
Term deposits		138,518	199,268
Trade and other receivables	7	29,900	40,707
Total current assets		384,695	367,773
Non-current assets
Fixed assets	8	2,628	3,130
Total non-current assets		2,628	3,130
Total assets		387,323	370,903
Liabilities
Current liabilities
Trade and other payables	9	7,841	7,557
Financial liabilities at fair value through profit or loss	10	182	-
Income tax payable Employee benefits	11	10,766 3,129	9,142 2,770
Total current liabilities		21,918	19,469
Non-current liabilities
Provisions	11	199	-
Net deferred tax liabilities	5	995	2,254
Total non-current liabilities		1,194	2,254
Total liabilities		23,112	21,723
Net assets		364,211	349,180
Equity
Issued capital	12	747,717	751,355
Reserves	13	(587,764)	(588,014)
Retained profits	14	175,522	185,839
Total equity attributable to the owners of Platinum Asset Management Limited		335,475	349,180
Total equity attributable to non-controlling interests:
Non-controlling interests	12	28,736	-
Total equity		364,211	349,180

Platinum Asset Management Limited Consolidated statement of changes in equity For the year ended 30 June 2016

Consolidated	Issued capital \$'000	Reserves \$'000	Retained profits \$'000	Non controlling interests \$'000	Total equity \$'000
Balance at 1 July 2014	722,812	(593,549)	245,993	-	375,256
Profit after income tax expense for the year	-	-	213,499	-	213,499
Other comprehensive income Reclassification to profit and loss on the disposal of Platinum World Funds Plc. Exchange rate translation impact of foreign subsidiaries	- -	1,158 4,377	- -	- -	1,158 4,377
Total comprehensive income for the year	-	5,535	213,499		219,034
Transactions with owners in the capacity as owners Exercise of options (Note 20) Dividends paid (Note 15)	28,543 -	- -	- (273,653)	- -	28,543 (273,653)
Balance at 30 June 2015	751,355	(588,014)	185,839	-	349,180
Consolidated	Issued capital \$'000	Reserves \$'000	Retained profits \$'000	Non controlling interests \$'000	Total equity \$'000
Balance at 1 July 2015	751,355	(588,014)	185,839	-	349,180
Profit after income tax expense for the year	-	-	200,887	(1,017)	199,870
Other comprehensive income Exchange rate translation impact of foreign subsidiaries	-	(422)	-	-	(422)
Total comprehensive income for the year	751,355	(422)	200,887	(1,017)	199,448
Transactions with owners in the capacity as owners Treasury shares acquired (Note 12) Share-based payments reserve (Note 13) Dividends paid (Note 15)	(3,638) - -	- 672 -	- - (211,204)	- - -	(3,638) 672 (211,204)
Transactions with non-controlling interests (Note 12)	-	-	-	29,753	29,753
Balance at 30 June 2016	747,717	(587,764)	175,522	28,736	364,211

Platinum Asset Management Limited Consolidated statement of cash flows For the year ended 30 June 2016

		Consolidated
	Note	2016 \$'000	2015 \$'000
Cash flows from operating activities
Receipts from operating activities		345,175	332,814
Payments for operating activities		(60,792)	(58,804)
Income taxes paid		(81,922)	(93,145)
Net cash from operating activities	28	202,461	180,865
Cash flows from investing activities
Interest received		4,275	7,887
Purchase of term deposits		(464,786)	(606,581)
Proceeds on maturity of term deposits		525,536	681,126
Receipts from sale of financial assets		7,939	135,744
Purchase of financial assets and investment in associate		(105,506)	(63,553)
Purchase of fixed assets		(464)	(1,200)
Dividends received		320	303
Distributions received		11	4
Net cash from/(used in) investing activities		(32,675)	153,730
Cash flows from financing activities
Proceeds from issue of shares		-	28,543
Proceeds from investment by non-controlling interests	12	29,753	-
Dividends paid		(211,225)	(273,539)
Net cash used in financing activities		(181,472)	(244,996)
Net increase in cash and cash equivalents		(11,686)	89,599
Cash and cash equivalents at the beginning of the financial year		127,679	24,854
Effects of exchange rate changes on cash and cash equivalents		3,086	13,226
Cash and cash equivalents at the end of the financial year		119,079	127,679

Note 1. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ("AASB") and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB").

The financial statements have been prepared on the basis of fair value measurement of assets and liabilities, except where otherwise stated.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates have been made, are disclosed in Note 2.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only and have been prepared on the same basis as the consolidated entity financial statements. Supplementary information about the parent entity is disclosed in Note 25.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Platinum Asset Management Limited ('Company' or 'parent entity') as at 30 June 2016 and the results of all subsidiaries for the financial year. Platinum Asset Management Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity' or 'group'.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity.

Equity investment in associates

An associate is an entity over which the consolidated entity exercises significant influence but not control over its financial and operating policies. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but does not control or jointly control those policies. Investments in associates are accounted for using the equity method of accounting in the financial statements. When necessary, adjustments are made to the financial statements of associated entities to bring their accounting policies and reporting dates into line with the consolidated entity's accounting policies. At 30 June 2016, the consolidated entity was assessed as having significant influence over Platinum Asia Investments Limited, as a result of its direct investment and investment management of Platinum Asia Investments Limited.

Under the equity method, the investment in an associate is carried in the statement of financial position at cost plus post acquisition changes in the consolidated entity's share of net assets of the associate. Where an associate was previously a controlled entity of the consolidated entity, the deemed cost for the purpose of applying the equity method is the fair value on the date that the consolidated entity ceased to have a controlling interest. After application of the equity method, the consolidated entity determines whether it is necessary to recognise any impairment loss with respect to the consolidated entity's net investment in associates.

The consolidated entity's share of an associate's post-acquisition profit or loss is recognised in the consolidated entity's statement of profit or loss and other comprehensive income and adjusted against the carrying amount of the investment. Dividends or distributions received or receivable from an associate are recognised in the consolidated entity's statement of profit or loss and other comprehensive income, with an associated reduction in the carrying value of the investment.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM refers to the Board of the Company, who are responsible for the allocation of resources to operating segments and assessing their performance. Refer to Note 3 for further information.

Foreign currency translation

Functional and presentation currency

Items included in the consolidated entity's financial statements are measured using the currency of the primary economic environment in which it operates (the "functional currency"). This is the Australian dollar, which reflects the currency of the country that the consolidated entity is regulated. The Australian dollar is also the consolidated entity's presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss and other comprehensive income.

Other offshore companies within the consolidated group

The results and financial position of companies in the group that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for the consolidated statement of financial position presented are translated at the closing rate at the date of the consolidated statement of financial position;
• income and expenses for the consolidated statement of profit or loss and other comprehensive income are translated at the date of transaction, or in certain instances, for practical purposes, a rate that approximates the rate at transaction date is used (for example, an average rate); and
• any exchange rate differences are recognised in other comprehensive income and accumulated as a separate reserve in equity.

The foreign currency reserve is recognised in the consolidated statement of profit or loss and other comprehensive income when the foreign operation or net investment is disposed of.

Financial assets/liabilities at fair value through profit or loss

Under AASB 139: Financial Instruments: Recognition and Measurement, investments are classified in the consolidated entity's statement of financial position as "financial assets at fair value through profit or loss". Derivatives and forward currency contracts are classified as financial instruments "held for trading" and equity securities are designated at fair value through profit or loss upon initial recognition.

The consolidated entity has applied AASB 13: Fair Value Measurement. AASB 13 defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market employees at the measurement date". AASB 13 increases transparency about fair value measurements, including the valuation techniques and inputs used to measure fair value.

The standard prescribes that the most representative price within the bid-ask spread should be used for valuation purposes. With respect to the consolidated entity, the last-sale or "last" price is the most representative price within the bidask spread, because it represents the price that the security last changed hands from seller to buyer.

The consolidated entity has applied last-sale pricing as the fair value measurement basis for equities and derivatives it holds.

AASB 13 also requires reporting entities to disclose its valuation techniques and inputs. This is described below.

Fair value in an active market

The fair value of financial assets and liabilities traded in active markets uses quoted market prices at reporting date without any deduction for estimated future selling costs. Financial assets are valued using "last-sale" pricing. Gains and losses arising from changes in the fair value of the financial assets/liabilities are included in the consolidated statement of profit or loss and other comprehensive income in the period they arise.

Fair value in an inactive market

The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. These include the use of recent arm's length market transactions, discounted cash flow techniques or any other valuation techniques that provides a reliable estimate of prices obtained in actual market transactions.

Recognition/derecognition

The consolidated entity recognises financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in the fair value of the financial assets or financial liabilities from this date.

Investments are derecognised when the right to receive cash flows from the investments have ceased or have been transferred and the consolidated entity has transferred substantially all of the risks and rewards of ownership.

In accordance with Australian Accounting Standards, derivative financial instruments are categorised as "financial assets/liabilities held for trading" and are accounted for at fair value with changes to such values recognised through the consolidated statement of profit or loss and other comprehensive income in the period in which they arise. Short futures are valued based on quoted last prices. The options held in Platinum Asia Investments Limited are valued at the ASXquoted last price. Gains and losses arising from changes in the fair value of the financial assets/liabilities are included in the consolidated statement of profit or loss and other comprehensive income in the period they arise. An assessment is made at the end of each reporting period as to whether there is objective evidence that an investment is impaired.

Revenue recognition

Management, administration and performance fees

Management, administration and performance fees are included as part of operating income and are recognised as they are earned. The majority of management fees are derived from the Platinum Trust Funds. This fee is calculated at 1.44% per annum (GST inclusive) of each Fund's daily Net Asset Value and is payable monthly. A performance fee is recognised as income at the end of the fee period to which it relates, when the group's entitlement to the fee becomes certain.

Interest income

Interest income is recognised in the consolidated statement of profit or loss and other comprehensive income and is based on the nominated interest rate available on the bank accounts and term deposits held.

Trust distributions

Trust distributions are recognised when the consolidated entity becomes entitled to the income.

Dividend income

Dividend income is brought to account on the applicable ex-dividend date.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Tax Consolidation Legislation

In accordance with the (Australian) Income Tax Assessment Act 1997, Platinum Asset Management Limited is the head entity of the tax consolidated group that includes all of its 100 per cent wholly-owned Australian subsidiaries.

Any current tax liabilities of the consolidated group are accounted for by Platinum Asset Management Limited. Current tax expense and deferred tax assets and liabilities are determined on a consolidated basis and recognised by the consolidated entity.

Offshore Banking Unit ("OBU") Legislation

In June 2010, the Australian Taxation Office declared that the consolidated group is an Offshore Banking Unit (OBU) under Australian Taxation Law. This allows the consolidated group to apply a concessional tax rate of 10% to net income it derives from its offshore mandates. The concession was applied from 1 July 2010.

Controlled Foreign Corporation ("CFC")

Platinum World Portfolios Plc. is considered to be a CFC for Australian tax purposes as a result of Platinum Investment Management Limited's investment in Platinum World Portfolios. As a result, the consolidated group is subject to tax on its proportionate share of Platinum World Portfolios' attributable or realised income.

Current and non-current classification

Assets and liabilities are presented in the consolidated statement of financial position based on current and non-current classification.

Asset/liabilities are classified as current when: it is expected or there is a legal obligation for the asset/liability to be realised or settled within 12 months after the reporting period. All other assets/liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Trade and other receivables

All receivables are measured at amortised cost, are not discounted, and are recognised when a right to receive payment is established. Trade receivables are predominantly comprised of management and performance fees earned, but not received, at balance date. Any debts that are known to be uncollectible are written off.

Cash and cash equivalents

In accordance with AASB 107: Statement of Cash Flows, cash includes deposits at call and cash at bank that are used to meet short-term cash requirements and cash held in margin accounts. Cash equivalents include short-term deposits of three months or less from the date of acquisition that are readily convertible into cash. Cash and cash equivalents at the end of the financial year, as shown in the consolidated statement of cash flows, are reconciled to the related item in the consolidated statement of financial position.

At 30 June 2016, all of the group's term deposits have maturities of more than three months from the date of acquisition. Under AASB 107, deposits that have maturities of more than three months from the date of acquisition are not included as part of "cash and cash equivalents" and have been disclosed separately in the consolidated statement of financial position. All term deposits are held with licensed Australian banks.

Margin accounts comprise cash held as collateral for derivative transactions.

Payments and receipts relating to the purchase and sale of term deposits are classified as "cash flows from investing activities".

Receipts from operating activities include management, administration and performance fees receipts. Payments for operating activities include payments to suppliers and employees.

Fixed assets

Fixed assets are stated at historical cost less depreciation. Fixed assets (other than in-house software and applications) are depreciated over their estimated useful lives using the diminishing balance method.

The expected useful lives are as follows:

Computer equipment	4 years
Software	2½ years
In-house software and applications	4 years
Communications equipment	4 - 10 years
Office fit out	3 - 13 years
Office furniture and equipment	5 - 13 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

A fixed asset is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Operating leases

Platinum Investment Management Limited has entered into a lease agreement for the premises it occupies and pays rent on a monthly basis. Payments made under the operating lease are charged to the consolidated statement of profit or loss and other comprehensive income. Details of the financial commitments relating to the lease are included in Note 22.

Trade and other payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their general short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of being invoiced.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds.

Issued capital

Ordinary shares are classified as equity.

Dividends

Dividends are recognised when declared during the financial year.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Platinum Asset Management Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the weighted average number of shares used to determine basic earnings per share to take into account options that are "in the money", but not exercised.

Disclosure of interests in other entities

The consolidated entity has applied AASB 12: Disclosure of Interests in Other Entities. AASB 12 requires disclosure about the nature of, and risks associated with, the consolidated entity's interest in other entities. An interest in another entity refers to involvement that exposes the entity to variability of returns from the performance of another entity and includes the means by which an entity has control, and can include the purchase of units or shares in another entity. The consolidated entity will apply the standard to its immaterial interest in the Platinum Trust Funds and any of its subsidiaries and associates. Please refer to Note 24 for the relevant disclosures.

Goods and Services Tax ('GST')

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

Share-based payments

On 2 June 2016, the Platinum Group established a Deferred Bonus Plan, in which the Company through an Employee Share Trust, purchased shares in the Company (PTM shares) for future allocation to key employees of Platinum Investment Management Limited (eligible employees). Employees selected to participate in the Deferred Bonus Plan are at the discretion of the Nomination & Remuneration Committee.

On an annual basis, the Nomination & Remuneration Committee will select the eligible employees that will be granted deferred rights to receive shares in the Company. A proportion of each eligible employee's bonus will be deferred and the amount deferred will vary. The shares will be allocated to eligible employee(s), on the condition that the employee remains with Platinum for a period of four years (vesting period), from the grant date of the deferred rights. The deferred rights may be forfeited or re-allocated to another eligible employee, if an eligible employee leaves Platinum, prior to serving their four year service period.

Details relating to share-based payments are set out in Note 20.

AASB 2: Share-based Payments requires an organisation to recognise an expense for equity provided for services rendered by employees. The amount that is recognised for provision of share based payments is derived from the fair value of the equity instruments granted. Deferred bonuses settled in PTM shares are considered to be a share-based payments award.

The fair value of the equity instruments granted and measured at grant date is recognised over the service period. The accounting expense will commence when there is a "shared understanding" of the terms and conditions of the offer. The service period may commence prior to grant date. In this case, the expense is estimated and trued-up at grant date.

The first tranche of rights granted to employees occurred on 20 June 2016 and will be equity-settled. As a result, the fair value of the rights granted is recognised in the consolidated accounts as an expense with a corresponding entry to reserves. The fair value is measured at grant date and amortised on a straight-line basis over the vesting period that the employees become unconditionally entitled to the share. In measuring the fair value, an allowance has been made for the risk or probability of forfeiture, which measures the risk of selected eligible employees leaving Platinum and forfeiting their rights.

At each balance date, the Company reviews the number of deferred rights granted. Adjustments are made to the sharebased payments expense, if the number of deferred rights granted has changed (e.g. through forfeitures). The impact of any revision to the original estimate will be recognised in the statement of profit or loss and other comprehensive income with the corresponding entry to reserves.

The purchase of shares on-market by the Company through an Employee Share Trust for future allocation to key employees is shown in the consolidated statement of financial position as a debit entry to the "treasury shares" account with the corresponding credit entry to "cash".

Rounding of amounts

The Company is of a kind referred to in ASIC Corporations "Rounding in Financial/Directors' Reports" Instrument, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in these financial statements have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2016. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

Interpretation 4: Determining whether an Arrangement contains a Lease

The Interpretation applies for annual periods commencing on or after 1 January 2016. The Interpretation addresses how to determine whether an arrangement is, or contains a lease as defined in AASB 117: Leases, when the assessment or a reassessment should be made and how payments under the arrangement should be treated. A determination on whether an arrangement is, or contains, a lease takes place at the inception of the arrangement and is based on the substance of the arrangement. This requires an assessment of whether fulfilment of the arrangement is dependent on the use of the specific asset and if the arrangement conveys a right to use the asset. This interpretation was assessed as not having a significant impact on the consolidated entity.

Interpretation 115: Operating Leases - Incentives

The Interpretation applies for annual periods commencing on or after 1 January 2016. The Interpretation addresses that a lessor may provide incentives for a lessee to enter into an operating lease and how such incentives should be recognised in the financial statements. The lessee recognises an incentive as a reduction of rental expense over the term of the lease. This is ordinarily calculated on a straight-line basis unless an alternative basis is more representative of the lessee's benefit from the use of the leased asset. This interpretation was assessed as not having a significant impact on the consolidated entity.

Interpretation 132: Intangible Assets - Web Site Costs

The Interpretation applies for annual periods commencing on or after 1 January 2017. The Interpretation addresses whether a web site is an internally generated intangible asset that is subject to the requirements of AASB 138 Intangible Assets and the appropriate accounting treatment of such expenditure. The Interpretation concludes that any development or expenditure that is internally generated shall be accounted for under AASB 138 and recognised as an intangible asset. This interpretation was assessed as not having a significant impact on the consolidated entity.

AASB 16: Leases

AASB 16 will apply for annual reporting periods beginning on or after 1 January 2019. The new standard eliminates the classification of leases as either operating leases or finance leases for a lessee and requires lease assets and lease liabilities to be recognised in the statement of financial position, initially measured at present value of future lease payments. In addition, depreciation of the lease assets and interest on lease liabilities will be recognised in the statement of profit or loss and other comprehensive income and the statement of cash flows will need to separate the total amount of cash paid into a principal portion and interest. This standard was assessed as not having a material impact on the consolidated entity, but the standard will have a significant impact on lease disclosures.

AASB 15: Revenue from contracts with customers and associated amendments

AASB 15 will apply for annual reporting periods beginning on or after 1 January 2018. AASB 15 will replace AASB 111, 18 and AASB 1004. The main objective of the new standard is to provide a single revenue recognition model based on the transfer of goods and services and the consideration expected to be received in return for that transfer. Revenue recognised by an asset manager will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur in future periods. This means that performance fees will only be recognised once the contractual measurement period is completed. This is consistent with how performance fees are already recognised in the consolidated entity's accounts. This standard was assessed as not having a significant impact on the consolidated entity.

There are no other standards that are not yet effective that are expected to have a material impact on the consolidated entity in the current or future reporting periods and on foreseeable future transactions.

Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances.

Estimation of useful lives of assets (Note 8)

The consolidated entity determines the estimated useful lives and related depreciation charges for its fixed assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation charge will increase where the useful lives are less than previously estimated lives.

Recovery of deferred tax assets (Note 5)

Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Impairment assessment (Note 21)

An impairment assessment of the carrying amount of Platinum Asia Investments Limited ("PAI") is conducted at each reporting date, including a look-through of each of PAIs underlying assets and liabilities.

Note 3. Operating segments

The consolidated entity is organised into two main operating segments being:

• funds management: through the generation of management and performance fees from Australian investment vehicles and its US-based investment mandates; and
• investments and other: through the consolidated entity's investment in ASX quoted, Platinum Asia Investments Limited and its immaterial investment in unlisted Platinum Trust Funds. In addition, Platinum Investment Management Limited provided seeding money to its new offshore fund, Platinum World Portfolios Plc. ("PWP") and is deemed to have control over that vehicle at 30 June 2016. As a result, the results, operations and statement of financial position of Platinum World Portfolios Plc, including any direct investments and the income generated from those investments, have been consolidated into the Platinum Group. The prior year comparative figures predominantly include the impact of the now-inoperative, Platinum World Funds Plc. Also included in this category are foreign cash holdings, Australian dollar term deposits and any associated interest derived from both the foreign cash holdings and term deposits.

The segment financial results, segment assets and liabilities are disclosed on the following page(s):

Note 3. Operating segments (continued)

2016	Funds Management \$'000	Investments and Other \$'000	Total \$'000
Revenue
Management, performance and administration fees	337,894	-	337,894
Interest	379	3,689	4,068
Net foreign exchange gains on overseas bank accounts	-	5,142	5,142
Net losses on financial assets and equity in associates	-	(2,915)	(2,915)
Net gains on forward currency contracts, dividends and other income	-	469	469
Total revenue and other income	338,273	6,385	344,658
Expenses	(61,698)	(766)	(62,464)
Profit before income tax expense	276,575	5,619	282,194
Income tax expense	(80,671)	(1,653)	(82,324)
Profit after income tax expense	195,904	3,966	199,870
Other comprehensive income	-	(422)	(422)
Total comprehensive income	195,904	3,544	199,448
Assets
Cash and cash equivalents	3,439	115,640	119,079
Financial assets and equity in associate	-	97,198	97,198
Term deposits	-	138,518	138,518
Receivables and other assets	31,512	1,016	32,528
Total assets	34,951	352,372	387,323
Liabilities
Financial liabilities	-	182	182
Payables and provisions	9,657	1,512	11,169
Tax liabilities	9,962	1,799	11,761
Total liabilities	19,619	3,493	23,112
Net assets	15,332	348,879	364,211

Platinum Asset Management Limited Notes to the financial statements 30 June 2016

Note 3. Operating segments (continued)

2015	Funds Management \$'000	Investments and Other \$'000	Total \$'000
Revenue
Management, performance and administration fees	340,894	-	340,894
Interest	399	6,694	7,093
Net foreign exchange gains on overseas bank accounts	-	16,898	16,898
Net losses on financial assets	-	(3,829)	(3,829)
Net losses on forward currency contracts, dividends and other income Total revenue and other income	- 341,293	(634) 19,129	(634) 360,422
Expenses	(58,763)	(109)	(58,872)
Profit before income tax expense	282,530	19,020	301,550
Income tax expense	(82,312)	(5,739)	(88,051)
Profit after income tax expense	200,218	13,281	213,499
Other comprehensive income	130	5,405	5,535
Total comprehensive income	200,348	18,686	219,034
Assets
Cash and cash equivalents	3,351	124,328	127,679
Financial assets	-	119	119
Term deposits	-	199,268	199,268
Receivables and other assets	43,041	796	43,837
Total assets	46,392	324,511	370,903
Liabilities
Payables and provisions	10,327	-	10,327
Tax liabilities	7,989	3,407	11,396
Total liabilities Net assets	18,316 28,076	3,407 321,104	21,723 349,180

Note 4. Income Tax Expense

The income tax expense attributable to profit comprises:

Current tax payable 83,631 84,206 Deferred tax - recognition of temporary differences (1,259) 3,738 Deferred tax - credited to share-based payments reserve 37 - Adjustment recognised for prior periods (85) 107 Income tax expense 82,324 88,051 Numerical reconciliation of income tax expense: Profit before income tax expense 282,194 301,550 Tax at the statutory tax rate of 30% 84,658 90,465 Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Tax rate differential on offshore business income (1,733) (2,542) Unrealised loss on investments (240) - Taxable loss on Controlled Foreign Corporation (229) - Non-taxable loss on Platinum World Portfolios Plc 436 - Other non-deductible expenses (483) 21 Adjustment recognised for prior periods (85) 107 Income tax expense 82,324 88,051 Note 5. Non-current liabilities - net deferred tax liabilities 2016 2015 \$'000 \$'000 Deferred tax liabilities comprises temporary differences attributable to: Unrealised foreign exchange gains on cash 3,043 3,391 Deferred Bonus Plan 806 - Unrealised gains/(losses) on investments (667) 16 Unrealised losses of Controlled Foreign Corporation (229) - Capital expenditure not immediately deductible (736) (65) Long service leave (555) (476) Annual leave (384) (355) Tax fees (68) (92) Periodic reporting (37) (37) Audit and accounting (101) (79) Printing and mail house (74) (46) Fringe Benefits Tax (3) (3) Net deferred tax liabilities 995 2,254	2016 \$'000	2015 \$'000

The net deferred tax liability figure is comprised of \$2,854,000 (2015: \$1,153,000) of deferred tax assets and \$3,849,000 (2015: \$3,407,000) of deferred tax liabilities.

It is estimated that most of the non-investment related deferred tax assets will be recovered or settled within 12 months, and are estimated to be \$1,222,000 (2015: \$1,148,987).

Note 6. Current assets - financial assets at fair value through profit or loss

	2016 \$'000	2015 \$'000
Options in Platinum Asia Investments Limited*	800	-
Unlisted unit trust investments	102	119
Equity securities - held directly by PWP**	48,438	-
Derivatives - held directly by PWP**	24	-
Forward currency contracts - held directly by PWP**	88	-
	49,452	119

*During the year, Platinum Investment Management Limited invested \$50 million in Platinum Asia Investments Limited and received 50 million shares and 50 million attaching options. The 50 million shares were accounted for as an investment in an associate (see Note 21 for further details) and the attaching options were classified as a financial asset and re-valued based on the market price of these options at 30 June 2016 which was 1.6 cents per option or \$800,000.

**During the year, Platinum World Portfolios Plc commenced investment activities and the direct investments shown above have been consolidated into the Platinum Group.

Note 7. Current assets - trade and other receivables

	2016 \$'000	2015 \$'000
Trade receivables	27,858	38,872
Interest receivable	605	833
Prepayments	995	991
Dividends receivable	115	-
Proceeds from sale of financial assets	319	-
Sundry debtors	8	11
	29,900	40,707

Trade debtors are predominantly comprised of management fees and administration fees derived from the Platinum Trust Funds and Mandates. The decrease in trade receivables was due to lower FUM at 30 June 2016 relative to 30 June 2015.

Trade receivables are received between seven to 30 days after becoming receivable.

Interest receivable comprises accrued interest on term deposits and cash accounts. Interest on cash accounts is received within three days of becoming receivable and interest on term deposits is received on maturity. Dividends receivable and proceeds from sale of financial assets were derived by Platinum World Portfolios Plc ("PWP").

Platinum Asset Management Limited Notes to the financial statements 30 June 2016

Note 8. Non-current assets – fixed assets

	2016 \$'000	2015 \$'000
Computer equipment - at cost Less: Accumulated depreciation	1,172 (994)	1,088 (939)
	178	149
Software and applications - at cost	4,343	4,270
Less: Accumulated depreciation	(3,569) 774	(3,114) 1,156
Communications equipment - at cost	126	152
Less: Accumulated depreciation	(98)	(100)
	28	52
Office premises fit out - at cost	2,468	2,240
Less: Accumulated depreciation	(990)	(666)
	1,478	1,574
Furniture and equipment - at cost	660	629
Less: Accumulated depreciation	(490)	(430)
	170	199
	2,628	3,130

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

	Computer equipment \$'000	Software & applications \$'000	Commun ications equipment \$'000	Office premises fit out \$'000	Furniture & equipment \$'000	Total \$'000
Balance at 1 July 2014	235	1,046	76	1,238	189	2,784
Additions	43	559	19	516	63	1,200
Disposals	-	-	(1)	-	-	(1)
Depreciation expense	(129)	(449)	(42)	(180)	(53)	(853)
Balance at 30 June 2015	149	1,156	52	1,574	199	3,130
Additions	116	80	4	233	32	465
Disposals	-	-	(2)	-	-	(2)
Depreciation expense	(87)	(462)	(26)	(329)	(61)	(965)
Balance at 30 June 2016	178	774	28	1,478	170	2,628

At 30 June 2016, there was no software and applications in the course of construction and/or development.

Note 9. Current liabilities - trade and other payables

	2016 \$'000	2015 \$'000
Trade payables	4,019	4,482
Unclaimed dividends payable to shareholders	450	472
Payable on purchase of financial assets	985	-
GST payable	2,387	2,603
	7,841	7,557

Trade payables are unsecured and payable between seven and 30 days after the consolidated entity becomes liable.

Refer to Note 16 for further information on financial risk management.

Note 10. Current liabilities - financial liabilities at fair value through profit or loss

	2016 \$'000	2015 \$'000
Derivatives - held directly by PWP Forward currency contracts - held directly by PWP	16 166	- -
	182	-

*During the year, PWP commenced investment activities and the direct investments shown above have been consolidated into the Platinum Group.

Note 11. Current and non-current liabilities - employee benefits

	2016 \$'000	2015 \$'000
Current liabilities
Annual leave	1,280	1,182
Long service leave	1,849	1,588
	3,129	2,770
Non-current liabilities
Payroll tax on Deferred Bonus Plan	199	-
	199	-

Note 12. Equity - issued capital

	2016 Shares	2015 Shares	2016 \$'000	2015 \$'000
Ordinary shares - fully paid	586,678,900	586,678,900	751,355	751,355
Treasury shares	-	-	(3,638)	-
Sub-total	586,678,900	586,678,900	747,717	751,355
External equity - Platinum World Portfolios	-	-	29,753	-
Total issued capital	586,678,900	586,678,900	777,470	751,355

Note 12. Equity - issued capital (continued)

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

External equity – Platinum World Portfolios Plc.

This represents external investment into the Platinum World Portfolios. During the year, A\$29,753,000 of external monies was invested into the Platinum World Portfolios. This has been presented as part of the non-controlling interest in the consolidated statement of financial position, along with the external equity share of the current year loss of \$1,017,000. Taken together, these figures total \$28,736,000 (which appears in the consolidated statement of financial position).

Treasury shares

Treasury shares represent PTM shares purchased on-market by the Platinum Employee Share Trust, in order to meet the Group's future obligations to eligible employees under the Deferred Bonus Plan. The value of shares was initially recognised at cost and will be allocated to employees, once the vesting period has been served and Deferred Rights exercised. On exercise, the cost of treasury shares will be adjusted against the share-based payment reserve. Details of the treasury shares allocation and closing balance was as follows:

	2016 Shares	2015 Shares	2016 \$'000	2015 \$'000
Unallocated shares held by the Employee Share Trust	591,578	-	3,638	-
Shares allocated to employees	-	-	-	-
Balance at the end of the financial year	591,578	-	3,638	-

\$3,638,073 represents the amount spent on purchasing PTM shares on-market. These have been disclosed in the consolidated statement of cash flows as "cash flows from operating activities".

Note 13. Equity - reserves

	2016 \$'000	2015 \$'000
Foreign currency translation reserve Capital reserve Share-based payments reserve	(292) (588,144) 672	130 (588,144) -
	(587,764)	(588,014)

Foreign currency translation reserve

Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income and accumulated as a separate reserve within equity. The balance of the foreign currency translation reserve was (\$292,000) at 30 June 2016.

On 17 November 2015, Platinum World Portfolios Plc commenced trading and its presentational currency is the US Dollar. The Australian Dollar appreciated against the US Dollar between the commencement date and 30 June 2016 and this caused the foreign currency translation reserve loss.

Note 13. Equity - reserves (continued)

Capital reserve

In 2007, in preparation for listing, a restructure was undertaken in which the Company sold or transferred all of its assets, other than its beneficial interest in shares in Platinum Asset Pty Limited and sufficient cash to meet its year to date income tax liability.

The Company then split its issued share capital of 100 shares into 435,181,783 ordinary shares. It then took its beneficial interests in Platinum Investment Management Limited to 100%, through scrip for scrip offers, in consideration for the issue of 125,818,217 ordinary shares in the Company.

As a result of the share split and takeover offers, the Company had 561,000,000 ordinary shares on issue and beneficially held 100% of the issued share capital of Platinum Investment Management Limited. Subsequently, 140,250,000 shares on issue representing 25% of the issued shares of the Company were sold to the public by existing shareholders.

The amount of \$588,144,000 was established on listing as a result of the difference between the consideration paid for the purchase of non-controlling interests and the share of net assets acquired in the minority interests.

Share-based payments reserve

During the year, the consolidated entity established and allocated rights to eligible employees under the Deferred Bonus Plan. For the year ended 30 June 2016, the aggregated deferred bonus awarded was \$3,650,000. The corresponding number of rights to receive PTM shares was 591,578 shares, based on a seven day Volume Weighted Average Price (VWAP) of the PTM shares for the seven (7) days prior to grant date, being \$6.17.

For the year ended 30 June 2016, the accounting fair value of these deferred rights was \$3,650,000. Please refer to Note 20 for further details.

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

	Share-based Payments \$'000	Foreign Currency \$'000	Capital \$'000	Total \$'000
Balance at 1 July 2014 Reclassification to profit and loss on the disposal of Platinum	-	(5,405)	(588,144)	(593,549)
World Funds Plc. Exchange rate translation impact of foreign subsidiaries	-	1,158	-	1,158
	-	4,377	-	4,377
Balance at 30 June 2015	-	130	(588,144)	(588,014)
Exchange rate translation impact of foreign subsidiaries	-	(422)	-	(422)
Movement in share-based payments reserve	672	-	-	672
Balance at 30 June 2016	672	(292)	(588,144)	(587,764)

Note 14. Equity - retained profits

	2016 \$'000	2015 \$'000
Retained profits at the beginning of the financial year	185,839	245,993
Profit after income tax expense attributable to owners of the Company	200,887	213,499
Dividends paid (Note 15)	(211,204)	(273,653)
Retained profits at the end of the financial year	175,522	185,839

Platinum Asset Management Limited Notes to the financial statements 30 June 2016

Note 15. Equity - dividends

Dividends

Dividends paid during the financial year were as follows:

	2016 \$'000	2015 \$'000
Dividend paid on 22 September 2015 (2015: 23 September 2014) of 20 cents (2015:20 cents) per ordinary share	117,336	116,067
Dividend paid on 22 March 2016 (2015: 18 March 2015) of 16 cents (2015:17 cents) per ordinary share	93,868	99,221
Special dividend paid on 18 March 2015 of 10 cents per ordinary share	-	58,365
	211,204	273,653

Dividends not recognised at year-end

Since 30 June 2016, the Directors declared to pay a fully-franked dividend of 16 cents per share, payable out of profits for the 12 months to 30 June 2016. The dividend has not been provided for at 30 June 2016, because the dividend was declared after year-end.

Franking credits

	2016 \$'000	2015 \$'000
Franking credits available at reporting date based on a tax rate of 30% Franking credits that will arise from the payment of the amount of the provision for income	69,513	78,107
tax at the reporting date based on a tax rate of 30%	10,766	9,142
Franking credits available for subsequent financial years based on a tax rate of 30%	80,279	87,249

Note 16. Financial risk management

Financial risk management objectives

The Company's and consolidated entity's activities expose it to both direct and indirect financial risk, including: market risk, credit risk and liquidity risk. Direct exposure to financial risk occurs through the impact on profit of movements in funds under management ("FUM") and through its direct investments in the Platinum Trust Funds, Platinum Asia Investments Limited and its related party offshore fund, Platinum World Portfolios Plc.

Indirect exposure occurs because the operating subsidiary, Platinum Investment Management Limited, is the Investment Manager for various investment vehicles (which include investment mandates, various unit trusts: namely the Platinum Trusts and Platinum Global Fund, its ASX-listed investment vehicles: Platinum Capital Limited and Platinum Asia Investments Limited and Platinum World Portfolios Plc).

This note discusses the direct exposure to risk of the consolidated entity. The consolidated entity's risk management procedures focus on managing the potential adverse effects on financial performance caused by volatility of financial markets.

Market risk

The key direct risks associated with the consolidated entity are those driven by investment and market volatility and the resulting impact on FUM or a reduction in the growth of FUM. Reduced FUM will directly impact on management fee income and profit because management fee income is calculated as a percentage of FUM. FUM can be directly impacted by a range of factors including:

• (i) Poor investment performance: absolute negative investment performance will reduce FUM and relative under performance to appropriate market benchmarks could reduce the attractiveness of Platinum's investment products to investors, which would impact on the growth of the business. Poor investment performance could also trigger the termination of Investment Mandate arrangements;
• (ii) Market volatility: Platinum invests in global markets. It follows that a decline in overseas markets, adverse exchange rate or interest rate movements will all impact on FUM;
• (iii) A reduction in the ability to retain and attract investors: that could be caused by a decline in investment performance, but also a range of other factors, such as the high level of competition in the funds management industry;
• (iv) A loss of key personnel; and
• (v) Investor allocation decisions: investors constantly re-assess and re-allocate their investments on the basis of their own preferences. Investor allocation decisions could operate independently from investment performance, such that funds outflows occur despite positive investment performance.

A decline in investment performance will also directly impact on performance share fees and performance fees earned by the consolidated entity. Historically, the amount of performance share fees earned by the consolidated entity has fluctuated significantly from year to year and can be a material source of fee revenue.

For those Investment Mandates that pay a performance share fee, the fee is based on a proportion of each Mandate's investment performance, and is calculated at the end of each calendar year and is based on absolute (and not relative) return.

Performance fees may be earned by the consolidated entity, if the investment return of a Platinum Trust Fund, Platinum Global Fund, Platinum Capital Limited, Platinum Asia Investments Limited or applicable Mandate exceeds its specified benchmark. Should the actual performance of a Platinum Trust Fund, Platinum Global Fund, Platinum Capital Limited, Platinum Asia Investments Limited or applicable Mandate be higher than the applicable benchmark, a performance fee would be receivable for the financial year. As at 30 June 2016, performance fees of \$11,927 (2015: \$1,903,861) were receivable.

If global equity markets fell 10% over the course of the year and consequently the consolidated entity's FUM fell in line with global equity markets, it follows that management fees would fall by 10%. If there was a 10% decrease in performance of Investment Mandates over the course of the year that resulted in an actual negative performance for the Investment Mandate for the year, then no performance fee would be earned.

The above analysis assumes a uniform 10% fall across all global equity markets. This is extremely unlikely as there is a large degree of variation in volatility across markets. For example, it is quite feasible for the Chinese market to grow whilst other Asian markets fall.

To mitigate the impact of adverse investment performance on FUM, the Investment Manager may employ hedging strategies to manage the impact of adverse market and exchange rate movements on the funds it manages. Market risk may be managed through derivative contracts, including futures, options and swaps. Currency risk may be managed through the use of forward currency contracts.

The section below discusses the direct impact of foreign exchange risk, interest rate risk and price risk on the consolidated entity's financial instruments held at 30 June 2016.

Foreign currency risk

The consolidated entity is materially exposed to foreign currency risk, because:

• it holds US Dollars in liquid cash;
• it derives management and performance fees from its US Dollar investment mandates; and
• it directly invests in Platinum World Portfolios and Platinum Asia Investments Limited.

US Dollar cash holdings

At 30 June 2016, the consolidated entity held US\$85,457,572 (equivalent to A\$114,692,756) in cash (2015: US\$96,884,319 equivalent to A\$125,709,510). If the Australian Dollar had been 10% higher/lower against the US Dollar than the prevailing exchange rate used to convert the balance with all other variables held constant, net profit before tax would have been A\$10,426,614 lower/A\$12,743,639 higher (2015: \$11,431,066 lower/\$13,972,402 higher).

US Dollar Fees

If the Australian Dollar had been 10% higher/lower against the US Dollar than the prevailing exchange rate used to convert the Mandate fees received with all other variables held constant, then the net profit before income tax expense would have been A\$899,794 lower/A\$1,099,768 higher (2015: A\$1,302,687 lower/A\$1,591,871 higher). This reduction is due to the fact that lower management fees were derived in the current year.

Investment in Platinum World Portfolios ("PWP")

Platinum Investment Management Limited's investment in PWP is denominated in US Dollars. If the Australian Dollar had been 10% higher/lower against the prevailing exchange rate at 30 June 2016, then the consolidated entity's net assets would have been A\$5.7m higher/A\$7.0m lower (exchange rate translation effect).

Platinum World Portfolios' investments are denominated in various foreign currencies specific to the investments held in each of the portfolios. The foreign currency with the largest impact on profit before tax, if there was a 10% currency movement at 30 June 2016, was the Japanese Yen. A 10% increase/decrease in the Australian Dollar would have caused net profit before tax to be A\$661,886 lower/A\$808,972 higher.

Investment in Platinum Asia Investments Limited

Platinum Asia Investments Limited's investments are also denominated in foreign currencies. The foreign currency with the largest impact on profit before tax, if there was a 10% currency movement at 30 June 2016, was the US Dollar, which was the currency with the largest exposure in this entity at 30 June 2016. A 10% increase/decrease in the Australian Dollar would have caused the consolidated entity's net profit before tax to be A\$1,675,000 lower/A\$2,047,000 higher.

Price risk

The consolidated entity is exposed to direct price risk, via exposure to fair value movements in the option price as a result of holding Platinum Asia Investments Limited options, indirect price risk through its equity-accounted investment in Platinum Asia Investments Limited and indirect price risk as a result of consolidating Platinum World Portfolios Plc into the Platinum Group.

The table on the following page includes the effect on net profit before tax due to a reasonably possible change in market factors, as represented by a +/-10% movement in the key regional indices affecting the securities exchange that each of the consolidated entity's investments are exposed, with all other variables held constant.

Impact on profit of a +10% movement (A\$)	Exposure to direct price risk – PAI Options	Exposure to indirect price risk – PAI investment	Exposure to price risk – PWP
Index
ASX All Ordinaries Index	800,000	-	-
Japanese Nikkei	-	-	1,049,969
Shanghai Stock	-	1,247,000	739,875
Exchange
National Stock Exchange	-	949,000	547,530
of India
S and P (US)	-	-	669,498
Total	800,000	2,196,000	3,006,872

Impact on profit of a -10% movement (A\$)	Exposure to direct price risk – PAI Options	Exposure to price risk – PAI investment	Exposure to price risk – PWP
Index
ASX All Ordinaries Index	(800,000)	-	-
Japanese Nikkei	-	-	(1,049,969)
Shanghai Stock	-	(1,247,000)	(739,875)
Exchange
National Stock Exchange	-	(949,000)	(547,530)
of India
S and P (US)	-	-	(669,498)
Total	(800,000)	(2,196,000)	(3,006,872)

Interest rate risk

At 30 June 2016, term deposits and cash are the only significant assets with potential exposure to interest rate risk held by the consolidated entity.

A movement of +/-1% in Australian interest rates occurring on 30 June 2016 will have no impact on profit as the interest rate on term deposits are determined on execution.

As stated above, the quantity of USD cash held by the consolidated entity at 30 June 2016 was A\$114,692,756 (or 32% of net assets). A movement of +/-1% in United States interest rates occurring on 30 June 2016 with all other variables held constant would have an impact on net profit before tax of A\$1,146,928 higher/lower (2015: A\$1,257,095 higher/lower).

Credit risk

Credit risk relates to the risk of a counterparty defaulting on a financial obligation resulting in a loss to the consolidated entity (typically "non-equity" financial instruments). Credit risk arises from the financial assets of the consolidated entity that include: cash, unsettled trades, P-Notes, derivatives, forward currency contracts and term deposits. All term deposits held by Platinum Investment Management Limited are held with licensed Australian banks that all have a AA- credit rating. All current account and cash balances are held with counterparties that have at least an A credit rating. There were minimal financial assets (P-notes, derivatives and forward currency contracts) held with counterparties with a credit rating of less an A.

The maximum exposure to direct credit risk at balance date is the carrying amount of cash and financial assets recognised in the consolidated statement of financial position. The consolidated entity may hold some collateral as security (for example, margin accounts) and the credit quality of all financial assets is consistently monitored by the Investment Manager. No financial assets are past due or impaired.

Any default in the value of a financial instrument held within any of the entities that Platinum Investment Management Limited acts as Investment Manager, will result in reduced investment performance. There is no direct loss for the consolidated entity other than through the ensuing reduction in FUM, as noted above in the section on "Market Risk". The Investment Manager employs standard market practices for managing its credit risk exposure.

The credit quality of cash, term deposits and financial assets held by each entity in the group via a counterparty can be assessed by reference to external credit ratings. At 30 June 2016 and 30 June 2015, the relevant credit ratings were as follows:

	2016 \$'000	2015 \$'000
Rating
AA-	147,407	208,861
A+	-	117,625
A	110,153	-
A-	1,801	461
BBB+	65
	259,426	326,947

Liquidity risk

Liquidity risk is the risk that the consolidated entity will encounter difficulty in meeting obligations associated with its liabilities. The consolidated entity manages liquidity risk by maintaining sufficient cash reserves to cover its liabilities and receiving management fees to meet operating expenses on a regular basis. Management monitors its cash position on a daily basis and prepares forecasts on a weekly basis.

Remaining contractual maturities

The following table details the consolidated entity's remaining contractual maturity for its financial and non-financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial and non-financial liabilities based on the earliest date on which the financial and non-financial liabilities are required to be paid.

At call \$'000	Within 30 days \$'000	Between 1 and 3 months \$'000	Over 3 months \$'000	Total \$'000
-	4,019	-	-	4,019
-	2,387	-	-	2,387
-	985	-	-	985
-	-	10,766	-	10,766
450	-	-	-	450
3,129	-	-	199	3,328
3,579	7,391	10,766	199	21,935
-	16	-	-	16
-	-	164	2	166
-	16	164	2	182

2015	At call \$'000	Within 30 days \$'000	Between 1 and 3 months \$'000	Over 3 months \$'000	Total \$'000
Non-financial
Trade payables	-	4,482	-	-	4,482
GST payable	-	2,603	-	-	2,603
Current tax payable	-	-	9,142	-	9,142
Unclaimed dividends payable	472	-	-	-	472
Employee-related provisions	2,670	-	-	-	2,670
Total non-financial	3,242	7,085	9,142	-	19,469

At 30 June 2016, the consolidated entity has sufficient cash reserves of \$256,078,560 (2015: \$324,771,720) and a further \$28,872,577 (2015: \$39,554,906) of receivables to cover these liabilities. The current year cash reserves figure includes \$138,517,900 of term deposits. All of these term deposits have maturities of 6 months or less from the date of acquisition.

Accordingly, the consolidated entity does not have a significant direct exposure to liquidity risk.

Fair value of financial instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

Capital risk management

(i) Capital requirements

The Company has limited capital requirements. Owing to the volatility caused by the performance share fee component of revenue, the Directors smooth dividend payments and have a policy of paying out 80% to 90% of net profit after income tax expense. This is a policy, not a guarantee.

(ii) External requirements

Platinum Investment Management Limited is required to hold an Australian Financial Services Licence (AFSL) issued by the Australian Securities and Investments Commission (ASIC). The AFSL authorises Platinum Investment Management Limited to provide investment management services and act as a Responsible Entity of Registered Managed Investment Schemes.

Platinum Investment Management Limited has complied with all externally imposed requirements to hold an AFSL during the financial year.

Note 17. Fair value measurement

Fair value hierarchy

AASB 13: Fair Value Measurement requires the consolidated entity to classify those assets measured at fair value using the following fair value hierarchy model (consistent with the hierarchy model applied to financial assets and liabilities at 30 June 2015):

• (i) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
• (ii) inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices) (level 2); and
• (iii) inputs for the assets or liability that are not based on observable market data (unobservable inputs) (level 3).

Note 17. Fair value measurement (continued)

The consolidated entity measures and recognises the following financial assets and liabilities at fair value, pursuant to AASB 13, on a recurring basis:

• (i) Equity securities, long equity swaps and long futures;
• (ii) Short equity swaps and short futures;
• (iii) Forward currency contracts;
• (iv) Listed options; and
• (v) Unlisted unit trust investments.

The following table analyses within the fair value hierarchy model, the consolidated entity's assets and liabilities measured at fair value at 30 June 2016 and 30 June 2015. The consolidated entity has no assets or liabilities that are classified as Level 3.

2016	Level 1 \$'000	Level 2 \$'000	Total \$'000
Assets Options in Platinum Asia Investments Limited Unlisted unit trust investments Equity securities - held directly by PWP Derivatives - held directly by PWP Forward currency contracts - held directly by PWP Total assets	800 102 46,753 2 - 47,657	- - 1,685 22 88 1,795	800 102 48,438 24 88 49,452
Liabilities Derivatives - held directly by PWP Forward currency contracts - held directly by PWP Total liabilities	- - -	16 166 182	16 166 182
2015	Level 1 \$'000	Level 2 \$'000	Total \$'000
Assets Unlisted unit trust investments Total assets	119 119	- -	119 119

The consolidated entity's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There were no transfers between levels 1 and 2 for any assets or liabilities measured at fair value during the year.

There are more investments at fair value at 30 June 2016 compared to 30 June 2015 primarily because PWP commenced trading during the year.

Valuation techniques used to classify assets and liabilities as level 1

As at 30 June 2016, the majority of the investments held by the consolidated entity were valued based on quoted prices in active markets. Accordingly, the majority of investments are classified as Level 1 in the fair-value hierarchy model. The options associated with the Platinum Asia Investments Limited investment have been classified as level 1, because these are ASX-listed and valued at quoted prices in an active market on a daily basis.

Note 17. Fair value measurement (continued)

Valuation techniques used to classify assets and liabilities as level 2

At 30 June 2016, there were certain financial instruments that were classified as level 2, because there was a degree of adjustment made to the quoted price i.e., whilst all significant inputs required for fair value measurement were observable and quoted in an active market, there was some degree of estimation or adjustment involved in deriving the fair value. Examples include:

• (i) forward currency contracts were classified as level 2 even though forward points were quoted in an active and liquid market. The forward points themselves were based on interest rate differentials;
• (ii) certain P-Notes/warrants were classified as level 2 because they were generally traded Over-The Counter and were often priced in a different currency to the underlying security;
• (iii) certain Over-The Counter (OTC) derivatives/options were classified as level 2 because either (i) the derivative contract itself was not listed and therefore there was no directly observable market price; or (ii) the price was sourced from the relevant counterparty, even though the price (and in the case of options, the relevant delta) could be verified from either Bloomberg or other pricing models; and
• (iv) certain index derivatives were classified as level 2 because the consolidated entity (via PWP) may agree with the counterparty to include or exclude one or more securities that make up the "basket" of securities that comprise the index derivative. Hence, the quoted price of the index derivative would be very similar, but not identical to the index derivative that the consolidated entity holds.

Note 18. Key management personnel disclosures

	2016 \$'000	2015 \$'000
The aggregate remuneration that the consolidated entity provided Executive and Non
Executive Directors was as follows:
Cash salary, Directors fees and short-term incentive cash bonuses	3,774	3,358
Accounting expense related to the KMP allocation under the Deferred Bonus Plan^	52	-
Superannuation	145	130
Increase/(decrease) in the consolidated entity's annual and long service leave provision	67	(10)
	4,038	3,478

^ One member of KMP, Elizabeth Norman deferred her bonus entitlement of \$300,000, which translated into 48,623 deferred rights to receive PTM shares, which was calculated by dividing the bonus amount by the Volume Weighted Average Price (VWAP) of PTM shares for the seven (7) trading days prior to grant date. Elizabeth Norman will receive 48,623 PTM shares if she remains employed at Platinum for a further four years (to 20 June 2020). The total number of deferred rights granted to all selected employees under the Deferred Bonus Plan was 591,578 rights. The accounting valuation attributable to Elizabeth Norman based on her proportionate share of the total allocation was \$52,200.

Note 18. Key management personnel disclosures (continued)

Interests of Non-Executive and Executive Directors in shares

The relevant interest in ordinary shares of the Company that each Director held at balance date was:

	Opening balance	Additions	Disposals	Closing balance
Michael Cole	200,000	-	-	200,000
Bruce Coleman	25,000	-	-	25,000
Margaret Towers	20,000	-	-	20,000
Stephen Menzies	30,000	-	-	30,000
Kerr Neilson	312,074,841	-	-	312,074,841
Andrew Clifford	32,831,449	-	-	32,831,449
Elizabeth Norman	766,748	-	-	766,748
Andrew Stannard	-	-	-	-

Note 19. Remuneration of auditors

During the financial year, the following fees were paid or payable for services provided by PricewaterhouseCoopers (the auditor of the Company) and its overseas network firms:

	2016 \$	2015 \$
Audit services - PricewaterhouseCoopers
Audit and review of the financial statements and AFSL audit	97,779	107,811
Audit services for managed funds that Platinum Investment Management Limited acts as responsible entity -
PricewaterhouseCoopers Audit and review of the financial statements and compliance plan audit	260,704	244,411
Audit services for managed funds that Platinum Investment Management Limited acts as responsible entity and audit services for Platinum World Portfolios Plc. - overseas PricewaterhouseCoopers firms
Audit of financial statements	104,701	104,102
Total audit services	463,184	456,324
Taxation services - PricewaterhouseCoopers Compliance services for the Platinum Group	67,480	173,938
Taxation services for managed funds for which Platinum Investment Management Limited acts as responsible entity -
PricewaterhouseCoopers
Taxation services	418,105	381,359
Taxation services - overseas PricewaterhouseCoopers firms
Foreign tax agent fees	47,311	12,530
Total taxation services	532,896	567,827
Other services - PricewaterhouseCoopers
Compliance and assurance services	158,988	97,144
Remuneration services (advice on set up of new Deferred Bonus Plan)	46,433	-
Total other services	205,421	97,144
Total fees paid and payable to the auditor and its related practices	1,201,501	1,121,295

Note 20. Share-based payments

Deferred Bonus Plan

On 2 June 2016, a new "Deferred Bonus Plan" was approved by the Nomination & Remuneration Committee. The main objective of the Plan is to recognise the contributions made by key employees and to retain their skills within the firm. Eligible employees are selected by the Nomination & Remuneration Committee during the annual bonus cycle and the proportion of each bonus that is deferred will vary by employee. The number of deferred rights are determined by dividing the discretionary deferred bonus amount allocated to each eligible employee by the PTM share price, using a volume weighted average price (VWAP) of the PTM shares over the seven (7) trading days prior to the grant date. If an eligible employee remains employed at Platinum after the four year vesting period expires, the employee has a further five years to exercise their deferred right. If an employee resigns from Platinum before they have met the service condition then, in most circumstances, the deferred rights will be forfeited.

It is anticipated that further grants (of deferred rights) will occur in the future, most likely in June of each year. In order to satisfy the obligation to the Company that arises from the granting of deferred awards, the Company also intends, over time, to purchase shares on-market and hold these shares within an Employee Share Trust. On vesting, eligible employees will receive one ordinary share in PTM from the trust in satisfaction of each of their rights. No fee is payable by any eligible employee on either grant or on exercise. There is flexibility for the Board to pay cash to the eligible employee on vesting, but the current plan envisages allocating PTM shares only.

Eligible employees will have no voting or dividend rights until their share rights have been exercised and their shares have been allocated. However, the deferred rights carry an entitlement to a Dividend Equivalent Payment. Upon the valid exercise of a deferred right, or deemed exercise, of a deferred right, an eligible employee will be entitled to receive an amount approximately equal to the amount of dividends that would have been paid to the eligible employee had they held the share from the grant date to the date that the deferred rights are exercised.

For the year ended 30 June 2016, total deferred bonuses were \$3,650,000. The corresponding number of deferred rights to receive Company (PTM) shares was 591,578 using a volume weighted average price (VWAP) of \$6.17 over the seven (7) trading days prior to the grant date (20 June 2016). As noted above, the deferred rights will vest if the eligible employee(s) remain employed at Platinum for a period of four years from the grant date.

Between 21 June 2016 and 23 June 2016, Platinum Asset Management Limited, transferred \$3,650,000 to its Employee Share Trust, which used these proceeds to purchase \$3,638,073 worth of PTM shares on-market (with \$9,128 being spent on brokerage and GST and the balance of \$2,799 still un-spent but reserved for ongoing bank fees and charges). The number of PTM shares purchased was 591,578 shares and the Trust will hold these 591,578 shares until the vesting date of 20 June 2020 (four years) and subsequent exercise.

Model inputs used to determine the accounting value for the grant of deferred rights on 20 June 2016:

Volume-Weighted Average Share Price (VWAP) over the 7 days prior to grant date	\$6.17
Value of Deferred Bonuses converted to Deferred Rights	\$3,650,000
Estimated number of Deferred Rights expected to vest at balance date (%)	87% chance of rights vesting
Service period commencement date:	1 July 2015
Grant date	20 June 2016
Vesting date	20 June 2020
Vesting period	4 years
Service period used to determine the period of amortisation for the purposes of determining the accounting expense (from service period commencement date to the vesting date)	5 years
Expiry date	20 June 2025
Exercise period	5 years

Note 20. Share-based payments (continued)

Expenses arising from share-based payment transactions

Based on the model inputs, the accounting expense has been calculated as: \$3,650,000 (value of deferred bonus award) multiplied by 87% (percentage of deferred rights expected to vest at balance date) divided by 5 (service period) which equals \$635,100. Hence, whilst the value of shares purchased on-market and associated brokerage and GST, was reflected through the consolidated statement of cash flows as a "cash flow from operating activity", the accounting expense impact for 2016 was \$635,100.

	2016 \$'000	2015 \$'000
Deferred rights granted on 20 June 2016 under the Deferred Bonus Plan Total share-based payments expense	635	- -
Associated payroll tax expense on deferred rights (payable on vesting)	199	-
Total	834	-

The associated payroll tax expense on deferred rights is included in staff expenses in the consolidated statement of profit or loss and other comprehensive income and will be paid on vesting. Payroll tax has been reflected as a provision in the consolidated statement of financial position.

At 30 June 2016, the fair value remaining to be amortised over the remainder of the vesting period is \$3,014,900 for the deferred rights granted on 20 June 2016. This will be expensed over the next four years.

In order to retain and motivate employees, additional options or Deferred Rights may be issued under the OPRP or Deferred Bonus Plan in the future, in compliance with the Corporations Act 2001.

Options and Performance Rights Plan ("OPRP")

Options granted, vested and exercised

All proceeds received from the issue of new shares pursuant to the grant of options in 2009 were deposited in the consolidated entity's bank account in the prior year. The total proceeds received during the prior year were \$28,543,000 and this appears in the consolidated statement of cash flows as "Proceeds from issue of shares" (in the prior year).

There are no longer any unvested or unexercised options.

Note 21. Equity investment in associate

During the year, the consolidated entity (via Platinum Investment Management Limited) invested \$50 million in Platinum Asia Investments Limited and received 50 million shares and 50 million attached options. At 30 June 2016, the consolidated entity was assessed as having significant influence over Platinum Asia Investments Limited, because of (i) its equity interest of 17.05% (ii) the fact that the consolidated entity operates as Investment Manager in accordance with the Investment Management Agreement and (iii) provides Platinum Asia Investments Limited with key technical information.

Consequently, the consolidated entity's equity investment in Platinum Asia Investments Limited represents an interest in associate which is accounted for using the equity method of accounting, and information relating to this is shown below and on the following page.

a. Interest in associate

Name of entity	Equity ownership interest 2016 %	Fair value 2016 \$'000	Carrying amount 2016 \$'000
Platinum Asia Investments Limited (ASX code: PAI)	17.05	44,250	47,746

Note 21. Equity investment in associate (continued)

The fair value reflects the 50 million shares held multiplied by the PAI closing share price at 30 June 2016 of \$0.885.

The carrying value reflects the consolidated entity's share of Platinum Asia Investments Limited's net assets (see section 21c below for further details).

We have conducted an impairment assessment of the carrying amount of \$47,746,000 including a look-through of each of the underlying assets and liabilities of Platinum Asia Investments Limited. Based on this analysis, no impairment exists at 30 June 2016.

There is no prior year comparative because the consolidated entity invested the \$50 million in Platinum Asia Investments Limited in September 2015, pursuant to the Platinum Asia Investments Limited Initial Public Offering (IPO). Platinum Asia Investments Limited commenced trading on the ASX on 21 September 2015.

b. Carrying amount of investment using the equity method

2016 \$'000
-
50,000
(1,543)
(711)
(2,254)
47,746

c. Share of associate's statement of financial position

	Associate (total) \$'000	Group's share of associate \$'000
Total assets	282,068	48,105
Total liabilities	(2,105)	(359)
Net assets	279,963	47,746

d. Associate's income

Investment income	(8,466)	(1,444)

e. Associate's net income

	Associate (total) \$'000	Group share of associate \$'000
Total net investment income	(8,466)	(1,444)
Total expenses	(4,326)	(737)
Loss before tax	(12,792)	(2,181)
Income tax benefit	3,743	638
Loss after tax	(9,049)	(1,543)

Note 22. Commitments

	2016 \$'000	2015 \$'000
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year	1,440	1,440
One to five years	840	2,281
	2,280	3,721

The operating lease relates to the business premises that the consolidated entity occupies. The lease is due to expire in January 2018, with an option to renew.

The consolidated entity has no commitments for significant capital expenditure.

Note 23. Related party transactions

Subsidiaries

Interests in subsidiaries are set out in Note 26.

Key management personnel

Disclosures relating to key management personnel are set out in Note 18 and the Remuneration Report in the Directors' Report.

Tax consolidation and dividend transactions

Any tax payable on income and gains from any entity within the tax consolidated group and dividends are sourced from the main operating subsidiary, Platinum Investment Management Limited ("PIML"), and paid out under the Company. Platinum Asset Management Limited is the head entity of the consolidated tax group and is the parent entity, and consequently, is the entity that ultimately pays out dividends to shareholders. The amounts paid to shareholders are disclosed in the consolidated statement of cash flows.

Transactions with related parties

Platinum Investment Management Limited provides investment management services to (i) its related party unit trusts - the Platinum Trust Funds and Platinum Global Fund (ii) its offshore fund, Platinum World Portfolios Plc. and (iii) its two ASXlisted investment companies (LICs), Platinum Capital Limited and Platinum Asia investments Limited.

Platinum Investment Management Limited is entitled to receive a monthly management fee from each of these entities, a monthly administration fee from the Platinum Trust Funds and Platinum Global Fund and a performance fee (that is calculated annually) based on the relative investment performance of the Platinum Trust Funds, Platinum Capital Limited and Platinum Asia Investments Limited. The total related party fees recognised in the statement of profit or loss and other comprehensive income for the year ended 30 June 2016 was \$280,579,030 (2015: \$279,493,123). The total related party fees receivable recognised in the statement of financial position at 30 June 2016 was \$21,888,293 (2015: \$27,729,311).

Pursuant to the Initial Public Offering, Platinum Investment Management Limited purchased 50 million shares and 50 million options in Platinum Asia Investments Limited ("PAI"). The fair value of these investments at 30 June 2016 was \$44,250,000 for the shares and \$800,000 for the options. At balance date, PIMLs proportionate share of PAIs net assets was \$47,746,000, and this share was disclosed as an investment in an associate in the consolidated statement of financial position. The \$800,000 worth of options was disclosed as a fair value investment in the consolidated statement of financial position.

Platinum Investment Management Limited held small investments in the Platinum Trust Funds. At 30 June 2016, the amount of this investment as disclosed in the consolidated statement of financial position was \$101,711 (2015: \$118,741). The income distribution relating to this, as disclosed in the consolidated statement of profit or loss and other comprehensive income was \$6,819 (2015: \$10,622).

Note 23. Related party transactions (continued)

During the current year, PIML provided seeding of US\$25 million (equivalent to A\$35,231,116) associated with the launch of a new offshore fund, Platinum World Portfolios Plc. ("PWP"). There are three sub-funds within PWP. PIMLs interest at 30 June 2016, along with the total Net Asset Value of each sub-fund is shown in the table below.

Name of sub-fund	PIMLs interest %	Value of PIMLs interest at 30 June 2016 (A\$)	Net Asset Value at 30 June 2016 (A\$)
Platinum World Portfolios Plc – International sub-fund	30.0	12,740,750	42,412,616
Platinum World Portfolios Plc – Asia sub-fund	100	13,389,454	13,389,454
Platinum World Portfolios Plc – Japan sub-fund	90.9	6,649,773	7,320,314
Total		32,779,977	63,122,384

PIML was responsible for any start-up costs associated with PWP (e.g.: legal fees, tax advice, foreign registration fees, and directors' fees). The total expenses paid or payable by PIML to third parties for and on behalf of PWP was \$318,934, which is included as part of legal and compliance costs. The total expenses paid include the payment of Directors fees to Stephen Menzies on 6 October 2015 (before PWP commenced operations). Mr Menzies is PIML's nominee on the Board of PWP. The payment made to Stephen Menzies was Euro 10,000 (equivalent to A\$15,728). Ongoing Directors Fees are now paid directly by PWP because PWP has now commenced trading. On 25 April 2016, a further payment of €10,000 (equivalent to A\$14,605) was made to Mr Menzies by PWP. PIML reimburses Stephen Menzies for any incidental travel and accommodation associated with attendance at Board meetings in Ireland. At 30 June 2016, the amount reimbursed was \$20,639.

With respect to PWP, PIML has undertaken to limit the annual expenses of each of PWPs sub-funds through the use of a voluntary expense cap, where total expenses of each sub-fund does not exceed a specified limit (for example: for the base fee class(es), the limit or cap is 1.65% of the Net Asset Value of each sub-fund). At 30 June 2016, the total amount reimbursed/paid or payable by PIML to PWP in respect of expenses for the period was A\$337,413.

Between 21 June 2016 and 23 June 2016, the Company transferred \$3,650,000 to its Employee Share Trust, which used these proceeds to purchase \$3,638,073 worth of PTM shares on-market (with \$9,128 being spent on brokerage and GST and the balance of \$2,799 still un-spent but reserved for ongoing bank fees and charges). The number of PTM shares purchased was 591,578 shares and the Trust will hold these 591,578 shares until the vesting date of 20 June 2020 (four years) and subsequent exercise.

After the expiration of four years, the shares will be allocated to key employees of Platinum if they remain employees of Platinum for the vesting period of four years and exercise their entitlement to these shares. If an employee leaves before the expiry of four years, the shares will be forfeited and may be re-allocated to other employees. The shares were purchased on-market by Platinum Asset Management Limited using funding provided by PIML.

Loan Agreements with related parties

There were no formal loan agreements executed with related parties at the current and previous reporting date, but there are intercompany receivables and payables.

Note 24. Disclosure of interests in other entities

(a) Structured entity disclosures (excluding subsidiaries)

A structured entity is an entity that is not part of the consolidated group, despite one or more entities within the consolidated group purchasing units or shares in the other (structured) entity. The relevant activities of unconsolidated structured entities are directed by the investment manager by means of contractual arrangements, such as an Investment Management Agreement.

At 30 June 2016, the consolidated entity holds an investment that can be described as a structured entity, via Platinum Investment Management Limited (PIML) holding small investments of less than 1% in each of the Platinum Trust Funds, and receiving management, administration and performance fees for its role as investment manager.

Note 24. Disclosure of interests in other entities (continued)

The following table provides information in relation to this investment:

	2016 \$'000	2015 \$'000
Net Asset Value attributable to all investors Platinum Trust Funds	16,777,587	19,360,960
Maximum exposure (includes PIMLs interest & fees receivable)
Platinum Trust Funds	21,403	27,322

(b) Subsidiary and associate disclosures

The table below discloses the Net Asset Value relating to the Company's (PAMLs) subsidiaries and associates at 30 June:

2016

Entity	Extent of PAML/PIMLs interest (%)	Net Asset Value attributable to all investors (\$'000)	Maximum exposure (PAML/PIMLs interest plus amounts receivable) (\$'000)
McRae Pty Limited	100	13,677	13,677
Platinum Asset Pty Limited	100	42,362	42,362
Platinum Investment Management Limited	100	183,104	183,104
Platinum Asia Investments Limited	17.1	279,963	47,998
Platinum World Portfolios Plc – International sub-fund	30.0	42,413	12,746
Platinum World Portfolios Plc – Asia sub-fund	100	13,389	13,389
Platinum World Portfolios Plc – Japan sub-fund	90.9	7,320	6,652
Platinum Employee Share Trust (market value of PTM shares purchased on market at balance date plus excess cash)^	100	3,407	3,407
PIMA Corp (US)	100	189	189
Total		585,824	323,524

^ Platinum Employee Share Trust holds PTM shares on behalf of employees selected to participate in the Deferred Bonus Plan (see Note 20 for further details).

Note 24. Disclosure of interests in other entities (continued)

2015

Entity	Extent of PIMLs interest (%)	Net Asset Value attributable to PIML (all 100% owned subsidiary's) (\$'000)
McRae Pty Limited	100	13,677
Platinum Asset Pty Limited	100	42,362
Platinum Investment Management Limited	100	194,303
PIMA Corp (US)	100	197
Total		250,539

The key difference between the interests held in the current and comparative year relates to the new investments in Platinum Asia Investments Limited and Platinum World Portfolios Plc.

There are no additional off-statement of financial position arrangements which would expose the consolidated entity to potential loss.

Note 25. Parent entity information

Set out below is supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

	Parent
	2016 \$'000	2015 \$'000
Profit after income tax	207,028	273,784
Total comprehensive income	207,028	273,784

Statement of financial position

	Parent
	2016 \$'000	2015 \$'000
Total current assets	131,101	134,182
Total assets	762,224	764,669
Total current liabilities	(11,216)	(9,614)
Total liabilities	(11,216)	(9,614)
Net assets	751,008	755,055
Equity Issued capital Capital reserve Retained profits	747,717 1,710 1,581	751,355 (19) 3,719
Total equity	751,008	755,055

Note 25. Parent entity information (continued)

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries There are no guarantees entered into by the parent entity in relation to debts of its subsidiaries, no contingent liabilities and no capital commitments.

Note 26. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1:

		Ownership interest
	Principal place of business /	2016	2015
Name	Country of incorporation	%	%
McRae Pty Limited	Australia	100%	100%
Platinum Asset Pty Limited	Australia
		100%	100%
Platinum Investment Management Limited	Australia	100%	100%
Platinum Employee Share Trust	Australia	100%	-%
Platinum Investment Management Australia Corp.	United States	100%	100%
Platinum World Portfolios Plc – International sub-fund	Ireland	30.0%	-%
Platinum World Portfolios Plc – Asia sub-fund	Ireland	100%	-%
Platinum World Portfolios Plc – Japan sub-fund	Ireland	90.9%	-%

Note 27. Events after the reporting period

Apart from the dividend declared in August 2016, no other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 28. Reconciliation of profit after income tax to net cash from operating activities

	2016 \$'000	2015 \$'000
Profit after income tax expense for the year	199,870	213,499
Adjustments for:
Prior period tax	(85)	107
Depreciation expense	965	853
Net loss on disposal of fixed assets	2	1
Expenditure on purchase of shares on-market associated with the Deferred Bonus Plan	(3,647)	-
Share-based payments accounting expense	635	-
Foreign exchange differences	(5,142)	(16,898)
Interest income	(4,068)	(7,093)
Loss on investments	2,446	4,526
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables	11,245	(7,499)
Decrease/(increase) in deferred tax assets	(1,701)	1,484
(Increase)/decrease in prepayments	(4)	237
(Decrease)increase in trade creditors and GST	(679)	(1,922)
Increase/(decrease) in provision for income tax	1,624	(8,835)
Increase in deferred tax liabilities	442	2,254
Increase in employee provisions and payroll tax	558	151
Net cash from operating activities	202,461	180,865

Note 29. Earnings per share

	2016 \$'000	2015 \$'000
Profit after income tax attributable to the owners of Platinum Asset Management Limited	200,887	213,499
	Number	Number
Weighted average number of ordinary shares used in calculating basic and diluted earnings per share	586,678,900	582,452,336
	Cents	Cents
Basic earnings per share Diluted earnings per share	34.24 34.24	36.66 36.66

Note 30. Contingent assets and liabilities

No contingent assets or liabilities exist at 30 June 2016 and 30 June 2015.

Note 31. Offsetting Financial Assets and Liabilities

Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The gross and net positions of financial assets and liabilities that have been offset in the consolidated statement of financial position are disclosed in the first three columns of the table. There were no derivatives and forward currency contracts that were offset in 2015.

30 June 2016	Gross amounts (\$'000)	Amounts offset in the statement of financial position Gross amounts set-off in the statement of financial position (\$'000)	Net amounts presented in the statement of financial position (\$'000)	Financial Instruments (\$'000) (1)	Related amounts not offset in the statement of financial position Cash collateral (\$'000)	Net amount (\$'000)
Financial Assets
Derivatives	24	-	24	(16)	-	8
Forward currency contracts	88	-	88	(88)	-	-
Total	112	-	112	(104)	-	8
Financial liabilities
Derivatives	16	-	16	(16)	-	-
Forward currency contracts	166	-	166	(88)	(78)	-
Total	182	-	182	(104)	(78)	-

(1) shows the impact of arrangements between the consolidated entity and the relevant counterparty on financial instruments that provide a right to set-off that becomes enforceable and affects settlement of individual financial assets and liabilities only following a specified event of default or in other circumstances not expected to arise in the normal course of business. These arrangements are not set-off in the Statement of Financial Position, as they were not enforceable.

In the Directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in Note 1 to the financial statements;
• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30 June 2016 and of its performance for the financial year ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations required by section 295A of the Corporations Act 2001.

______________________________ ______________________________

Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the Directors

Chairman Director

Michael Cole Kerr Neilson

25 August 2016 Sydney

	۰	Group materiality was set at \$14.1 million, which represents 5% of Group profit before tax.
Materiality Audit scope		We conducted an audit of the most significant entities within the Group being Platinum Investment Management Limited (PIML), Platinum Asset Proprietary Limited (PAPL) and Platinum World Portfolios Plc (PWP). This was supplemented by additional targeted audit procedures in corporate functions, such as cash and treasury.
Key audit		Fee revenue
matters		Offshore banking unit taxation
		Accounting for investment vehicles.

Overall Group materiality	We determined overall Group materiality to be \$14.1 million (2015: \$15.1 million). We applied this in:
	planning and performing the audit
	evaluating the effect of : $\bullet$
	$-$ identified misstatements on the audit, and
	- uncorrected misstatements, if any, on the financial report
	forming our opinion in the auditor's report.
How we determine it	5% of Group profit before tax

Key audit matter	How our audit addressed the key audit matter
accounted for in the financial statements.	Group. We particularly focused on:
The most significant areas of judgement in applying AASB 10 related to:	Substantive powers to remove PIML as investment manager
The level of power over the investment vehicles;	The decision making powers of directors of the investment vehicles
The extent of exposure to returns or rights to ٠ variable returns from the Group's involvement	The independence of directors of the investment vehicles
with the investment vehicles; and The ability for the Group to use its power over ٠ the investment vehicles to affect the amount of the return.	The ability to remove and appoint new directors of the investment vehicles The level of the Group's equity interest
At 30 June 2016, the Group concluded that:	and their voting rights.
PAI was treated as an investment in associate given the significant influence the Group was deemed to have over the investment vehicle.	Assessed the exposure to returns by aggregating the equity interest held by the Group and the expected management, and performance fees.
PWP was required to be consolidated in to the ٠ Group financial statements given the control the Group was deemed to have over the investment vehicle.